Team Case Analysis Assignment: Palm
IT Management – FMIB3
1 Introduction
Palm is a small US company that is part of US Robotics, which was acquired by 3Com in 1997.
The company had become successful due to their hand-held device: Pilot, which was introduced
in 1996 and obtained 51.45% market share worldwide within one year1. The Pilot had set itself
apart from competitive products that failed shortly a+er being introduced to the market, by not
having extra features, but by being “a simple tool that did not compromise on the quality of any
of its components.”2 Overall, the Pilot was well received by the end consumer, as it worked
be2er than any of the competitors’ products. However, the market environment Palm operates
in is volatile and changes quickly, among other arising issues, which is why the company now
faces decisions regarding the direction for their future. Therefore, we will be analyzing their
current situation and possible changes, which we will be using as basis to ask various
departments for separate recommendations. Finally, using those recommendations, we will be
giving our final conclusion on the best possible next steps for Palm.
2 Problem Definition
One of Palm’s most imminent issues are their competitors (external problem). Palm has so far
done well to manage the external threats of competitors (Microso+, Psion, HP, Apple, etc.), as
well as a volatile and quickly changing market itself. However, Microso+’s release for their new
OS, Windows CE 2.0, is looming on the horizon, as well as Psion’s opening up its pla?orm to
phone manufacturers. This means, that keeping the highest market share within the industry
will only become more difficult until Palm manages to possibly become the industry standard
with their OS. Another current problem that Palm is facing, are the limited resources at their
disposal (internal problem). Although Palm is now owned by 3Com and thus has access to
additional financing, manufacturing facilities and their connections, developing and producing
the devices as well as the so+ware at the same time is very costly.3 Thus, the company’s focus,
eAorts, and financial resources are split between two complementary but diAerent products.
This makes it harder for Palm to retain their position as market leader for hand-held devices
while trying to establish their OS as the industry standard. These two problems present Palm
with the following two major questions: Should they focus their eAorts on their OS, pursuing
the idea of becoming the industry standard and to that end license their system? And Should
Palm continue to manufacture their devices, as this could be very pro7table but takes up many
of their resources?
3 Analysis
3.1 Business Model Canvas
In order to answer the previously stated questions and thus overcome the problems that Palm is
currently facing, we analyzed the company using the Business Model Canvas (BMC) (see
1 Case, p. 1-2
2 Case, p. 6
3 Case, p. 6
Work submitted by: Market Cohort, Team 11
Nicolas Van Bylen, Abdul Rashid Khalili, Hadi Labarang, Wei-An Liang, Johannes Stute, Pulkit Taneja
Thursday, February 19, 2015
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Appendix, Figure 1). From the BMC we can see that Palm is targeting the end consumers with
their devices (or hardware) and third party developers (hobbyists, as well as small and large
professional ones) with their software development kit (SDK). Additionally, Palm could target
other hardware manufacturers (small and/or large ones) by licensing their OS.
3.2 The Network E’ect
The Network EAect, additional to the BMC, is another important concept. During the time when
a new technology is being developed, it is not crucial to be the 7rst-mover, but it is vital to get
critical mass for the network eAect, in order to establish oneself as the market leader and later
on the industry standard. In other words, the network eAect is one of the most important
concepts when trying to get the new technology oA the ground. This also holds true with
regards to the handheld device market, for which there are a few potential network eAects that
Palm can take advantage of. The 7rst one that comes to mind is the following: As the number of
users increases, the value to create an app increases, increasing the number of app developers
and thus apps, which in turn increases the value for the user (positive externality, as the
customers did not pay for the additional value) and thus the number of users. This indirect
network eAect currently already takes place and has gone over the tipping point, evident by the
fact that over 100 apps had been released by the end of 1996, less than one year a+er the Pilot
was released. A second network eAect that Palm did not yet take advantage of will take place
once they start to license their OS. Similar to the 7rst one, as the number of users used to
Palm’s OS increases, demand for that OS will increase, increasing the demand licenses and thus
the supply of devices running on Palm’s OS.
3.3 Pricing
Team Case Analysis Assignment: Palm
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