Strategy: Hardware? Software? Service? Partnership?

Let’s take a look at the players in the “smart phones” market: Apple, Nokia, Microsoft, RIM (blackberry),  Linux Mobile, and Palm. Sun used to have a Java Mobile but it seems to have dropped off the market, in terms of device market share. And then, there’s the new pretender to the crown in the form of Google, with its Android OS offering.

How do they stack up in terms of Hardware? Operating System? Service Offering? Well, here goes:

A first glance at this table seems to reflect some of the player’s pre-existing biases. Microsoft is known for its software business so that’s where it put the most weight; Google is all about free software to power their services; RIM and Palm do a hardware software combo; Apple throws its weight behind a fully Apple controlled experience.

However, there are a few caveats: For example, while Microsoft is in the space primarily as a software provider, it also owns Danger Inc., makers of the Hiptop. And while Palm has its own software, many of its devices are powered by Windows Mobile.

But apart from those exception areas, it appears that strategies are organized across four business models:

• OS only: This strategy is preferred by Sun and Linux. The model here is to provide an operating system that can be used by others. For Sun, this strategy has largely failed as substantially less than 1% of all handsets around the world is powered by their OS. Linux, which really was the first open source mobile OS has captured about 4 percent of the global smart phone market to date. Microsoft is the big leader in terms of that strategy, with its Windows Mobile OS currently powering about 12 percent of all smartphones around the globe.
• Software + Service: All this leaves us with Google and their Android offering. Much of the commenting today is that the move Nokia just made was aimed at the fact that Google had an “open” operating system. But what Google is really trying to do is provide an operating system that melds OS and services. Either that or they are in the OS only camp. Either way, they are not playing in the same space as the iPhone or Nokia (see triple play below).
• Hardware + Software: This model is preferred by RIM, makers of the Blackberry, and Palm (especially with their inexpensive Palm Centro line). This strategy works best if you want your device to be focused on few use scenarios: The blackberry is first and foremost a portable email station; Palm devices are first and foremost PDAs. This orientation comes from a past where the device wasn’t initially intended as a phoe but morphed into one.
• The triple play (ie hardware/software/service): This is the strategy currently used by Apple with the iPhone: they provide the hardware, the software, and a set of services (me.com, iTunes, Software store) on a complete package.  Through recent acquisitions, Nokia has been moving in this direction: while they were traditionally a hardware player, they started adding services to their devices. With today’s announcement, they’re also getting some control over software.

So looking at this, it becomes apparent that while many are pointing to Nokia going after Google, it may not be the target. Since Nokia does service and hardware already, getting more control over its own OS is probably an important move.

Open Sourcing

I can already hear some readers snickering: Symbian’s been open-sourced so Nokia does not have control. Let me make something very clear: the gold rule (“he who’s got the gold makes the rule”) applies to Open Source as it does in other areas. While it won’t get exclusivity, Nokia, having paid $400+ million to open source Symbian will be considered “more equal than others” by the Symbian foundation, I’m sure.

But why open source? If we look at the players mentioned above, their position on open source and their market share, the picture becomes clearer:

Looking at the market share date, Nokia’s move doesn’t seem to make sense: They currently control 65 percent of the market, why would they bother? But here’s the thing: There’s this newcomer called Apple and they didn’t exist 18 months ago: they now have 7 percent of the market and are growing.

If I’m a Nokia executive and I’m looking at this data, I start worrying. So what do I do? I look at competitive advantage: initially, I try to compete with cooler devices (the Nseries) and while it stops some of the bleeding, it doesn’t appear to fully halt the competition. So I start looking at services as a way to stabilize revenue (Maps, Music, Games) but that doesn’t stick. Then I realize that my problem is the operating system: I’m stuck with that alliance of partners I have but they’re slowing me down. So I have to take over. But I can’t do that by just kicking all of them out. So I acquire and open source.

The open source move fills three strategic objectives:

• I get to keep partners still involved but get them to agree to my taking charge.
• I get other people to improve my code and/or developing FOR it, thus allowing me to counter a potential Google threat if it ever materializes.
• I get to look more “open” than Apple and will use that in my messaging

The Future: Collateral Damage Then Status Quo

Of course, while it works out great for Nokia, there is a little bit of collateral damage:

• Sun’s offering, while interesting had already sunk largely into irrelevancy so they’re no longer a player.
• Palm OS, was teetering on the edge but now it’s pretty much cooked.
• Linux, while still having teeth, will probably see its market share dwindle as its unique selling proposition (more open than others) is gone.

So that’s unfortunate but what does it do to the rest of the market. Well, in fact, it looks like today’s events wont’ have much impact: Palm, Linux and Sun represent about 5 percent of the market. With Apple at 7%, RIM at 11%, Microsoft at 12% and Nokia at 65%, it looks like the market will stay pretty consistent. The remaining 5% will be carved out by the existing players and by Google’s entry into the market. Nokia will remain at the top for now.

Potential events that could have a more disruptive effect: a Microsoft/RIM partnership (or outright acquisition) which, when integrated would give Windows Mobile a 23% market share. But short of such a move, it looks like the situation will mostly stay at status quo for the time being.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title No Changes in Mobile. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

As was the case for the previous part, I have only edited the content for formatting sake.

Q: Let’s switch gear to the unit replacement program: The Palm website seems to have difficulties recognizing existing accounts. Part of the frustration of my own experience was that, having bought a device from the Palm website in early 2007, I was unable to get to the information online because the site did not recognize the email address I used to register (even though I have some emails sent by palm to that email address). This resulted in my being unable to get the exact date of my purchase. When I talked to the customer service representative, I was told that we could not move forward with any replacement without that information. Considering the device hadn’t been in the marketplace for a year, I thought that it would be considered under warranty no matter what. Why is it that customers still need to provide a purchase date for devices that are less than a year old?

A: They shouldn’t have to, you are right. Unfortunately, since we primarily sell through the carrier channel, determination of an in-warranty vs. out-of-warranty device is not a perfect science. Our practice is to systematically derive the purchase date from the manufacture date, based on the serial number.

We have very reliable data on how long a product takes to move through distribution and sales channels that helps us ensure we offer all of our customers a minimum of 12 month warranty, as stated in our contract with the customer (i.e. the warranty). If an agent believes the product may fall outside of the 12 month period, we request proof-of-purchase (POP), which is not unusual in the consumer electronics industry. That being said, an agent must use their best judgment and always handle these discussions in a professional and courteous manner with the customer.

To better serve our customers, we’re currently exploring instituting a policy that will not require agents to check purchase dates for products that have been newly released (i.e. less than a year old). This should help eliminate unnecessary questioning and allow our agents to proceed directly to getting a customer’s issue resolved.

Q: If customers are not able to supply a date, why is it that there is no way for a call center operator to look up information for devices bought from Palm’s online store?

A: We do aspire to have all of our customers’ transactional information available to our service agents. However, this is not the case for a variety of reasons. First, there is some information that will never be available or kept; carrier sales information and information protected by privacy laws, for instance. But, for the rest, specifically any transactional information Palm is exposed to and legally able to maintain, we are making huge investments in a CRM program that is bringing this information all together in a master customer database. Just this past year, we integrated most of our direct sales transactions (e.g. from our online store) into our service application, loading both customers and assets. As for Tristan’s case, unfortunately the purchase last winter was prior to this integration going into effect, so the purchase record was not there.

Q: Forced to supply a date, I gave a date at random in order to push the call further. I was then told that it was the exact date of my purchase (a dubious claim at best since the date happened to be, after I checked, before the date of the press release announcing the release of the Treo 680). When I contested the possibility of this being the date at a later time, I was told that you are tracking devices dates by serial numbers. If that’s the case, why is that information not being used initially? (It’s generally easier to find a device’s serial number than its purchase date since the serial number (and incidentally, IMEI) is on the device)

A: I suspect that in this case, and what is probably routine behavior by agents, is to request the date of purchase from the customer, and to take their word for it — which is the proper thing to do. Now when a customer is not confident about the purchase date or does not have any recollection, then an agent is going to check out the serial number to get a good idea of the purchase timing — it’s only then that we are going to call into question the warranty, and perhaps seek proof of purchase.

Q: Vendors like Apple and RIM track their device purchase date by IMEI. Why isn’t Palm doing the same? And if it is, why isn’t that information available to call center personnel?

A: IMEI and ESN are two industry relevant codes for mobile devices. The serial number is a Palm-specific number generated at time of manufacture. Because it is consistent across all Palm products — where it is not for IMEI and ESN — we tend to rely on serial numbers as our default tracking method.

Q: The retail price for an unlocked Treo 680 is $379, the street price for an unlocked Treo 680 is around $250. In either of those cases, the device would come with a one year warranty. The replacement price for a Treo 680 is $199. Why is the replacement price so high?

A: The primary drivers of repair and replacement cost are parts and labor, and hence can’t be directly compared to the product. The wireless industry subsidizes phone purchase prices, making the total cost much lower than the actual cost of hardware and labor.

Q: Looking at the prices listed on your site, it appears that all your phones have the same replacement price ($169 by web, $199 by phone) However, prices for the unlocked devices listed in the Palm store range from $379 (for an unlocked Treo 680) to $669 (for an Alltel Treo 700p). Does that mean that the repair cost for all units is the same? Why isn’t there variable pricing on the repair costs?

A: The actual cost of repair may vary across units, but this variance is much less than you’d think. The process steps that all units go through for diagnostics, component replacement, cosmetic refurbishment, and logistics are identical. The only real difference is the value of the parts required for a given repair.

While variable pricing seems like the best thing for the customer, we actually provide fixed pricing to deliver a better customer experience. This is because we want to quote a price upfront and quickly process the replacement without having to come back to the customer and explain that their fix was different or more costly than what was expected at the outset. This would create unnecessary tension and delays when a customer needs their phone back to them in working order as soon as possible. We don’t really know what parts will be required until we open the device, and a call center agent would not be able to accurately estimate the costs.

Q: A year ago, the replacement cost for a Palm 600 was $100 (I unfortunately broke 4 screens on Palm 600s through the years so I’m familiar with that price). Today, such a replacement would cost $169. Why the price increase?

A: As products get older, our cost to service that product normally increases. It reflects the growing cost of acquiring parts, maintaining inventory, expertise and training for repair events that become more and more infrequent.

Q: Apple has made it a practice to sell special contracts (called AppleCare) on their devices that provide extended warranty. This includes selling AppleCare for iPhones (for $69). The program includes replacement of defective units at no extra charge and extends warranty from 1 year to 2 years. Why isn’t Palm offering a similar program?

A: With the first line of smartphone product support at multiple carriers, including warranty processing, an extended warranty program has been a challenge for Palm to offer — mostly because of channel complexities. We are presently working through the challenges that have made this difficult, and hope to offer this service feature to our smartphone consumers in the future.

Apple has a unique relationship with AT&T that may make these programs a bit easier to provide.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Palm responds, Part 2. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

At the time, I figured that this was a nice and convenient answer that really acted as more of a way to stonewall me. So it was with great surprise that I was contacted with a follow-up by John Moses, the VP of customer relations worldwide for Palm.

Not only did John apologize for my own experience but he was considerate enough to provide me with a lot of answers to questions I asked (and, in a closing to my encounter with Palm, he also provided me with a replacement unit for my Treo 680). While my faith in Palm hasn’t been restored yet, I think there is a lot to ponder in the questions and answers John provided me. Because there is a lot to digest, I am breaking this Q&A into two parts: The first one, which follows, addresses general issues around customer support and around my own experience. The second part talks about the unit replacement program and some of the decisions made there.

So without further ado, here is the Q&A, which is not edited in any way, save for light formatting to increase readability .

Q: First of all, thanks for taking the time to do this interview and alleviate some of the fears people may have after I posted my experience with Palm. The Treo 680 has been out for about a year now. As the head of Customer Relations, have you seen particularly high levels of calls relating to it as opposed to other palm devices?

A: Because of a special program we implemented and highly marketed this past year called 1–800 Free Setup Help, we have had a higher volume of calls related to the Treo 680. This Palm sponsored program — where we have also gained the support of our major carrier partners — encourages customers to call us at no charge within the first 90 days of purchase for dedicated device setup assistance. The results have been highly encouraging and we are continuing to evaluate additional programs that increase the number of interactions we have with customers so they get more out of their device.

We also strongly recommend that customers take advantage of the Treo 680 software updaters, as they do make a noticeable improvement to the performance of our devices. Customers can find these
on our website.

Q: It is my understanding that Palm works largely on second line of support for mobile phone companies they have partnerships with and works as first line of support for unlocked devices they sell. As a result, I would suspect that the number of calls for unlocked devices is probably higher. Is that the case?

A: You are right that for the majority of our phones — all of those sold through the carrier channel — we are the second level of support. Our carrier partners have extensive support capabilities and are interested in maintaining a connection with their subscriber customers — and we respect that. As a general rule, these customers are encouraged to begin support with their wireless service provider, and they will in turn escalate to us at Palm if the issue warrants additional device expertise.

There are exceptions to this, however, and customers frequently contact us directly; this most often is because they are taking advantage of our special programs including our Free Setup Help, which I mentioned before, or our MyPalm Membership, where customers can receive special benefits including a dedicated member assistance line.

For those customers who have bought unlocked devices directly from us on our website or in our stores, we certainly are committed to be their first line of support. In terms of call volume, we receive more for carrier-locked devices than unlocked ones, partly because there are just more sold, but equally so because we have a close relationship with our carrier partners which involves regular collaboration and warm transfers.

Q: Are calls for unlocked devices routed to different call centers than calls for locked (or carrier specific) devices? If that’s the case, could you explain some of the logic behind it?

A: No, support for both types of devices is provided by the same call centers, and with the same agents. Our support agents are trained on all Palm products and all customers are treated the same.

Q: Palm recently started to move phone support to a pay model (I believe it’s $19.95 per call unless it results in an exchange). Does Palm look to its phone support as a potential profit center?

A: First, customers transferred from a wireless carrier or a call with a basic inquiry will not be charged. Also, if a call results in a repair or if an agent cannot solve the issue, we would waive the fee.

Palm has always charged for phone-based technical support beyond 90 days of purchase, based on our standard support policy and warranty — this is standard industry practice for many consumer electronics manufacturers. We have just reduced (in December) the cost of post 90-day technical support (from $25 to $14.95), and when we do charge customers, the funds are used to subsidize the costs of the support infrastructure we provide.

Palm regards the relationship with its customers and support specifically, as an investment in the future, not as a profit center. We try to make Palm support valuable and affordable to customers by offering various options, including several options that are free of charge (e.g. Online Chat).

Q: Has reaction among customers to the move of phone support to a pay model been negative or positive?

A: As I mentioned before, Palm has always charged for certain phone-based support services. We have seen a positive response to our new “Expert” pay services, which certainly is evidence that customers don’t mind paying a fee for a service that they deem important and that is well executed.

Q: The level of expectations for a service one pays for is generally different than the level of expectation for something that is free. What has Palm done to ensure that the experience around paid calls is better than the previous (free) experience for customers?

A: Palm still provides many free service options, so a customer is never forced to pay for support. We also strive for and expect the best level of service for both types of calls — paid and free — as the same customer may experience both types of support options during the time they own their product and we want their interactions to always be consistent and of the highest quality.

Q: I am sure there are studies about user satisfaction across the industry as a whole. Do you have information about Palm’s standing, compared to its competitors, in terms of customer experience? Is it better? Worse? What are the main issues around it and what is Palm doing to address them?

A: I can tell you that our case satisfaction scores — those scores that rate the quality of the support given by an agent for a given service request — is either at the top or very close to the top of any comparative set you will find for true technical support on complex consumer electronics. Of course we always believe we can do better.

We have a number of teams that continually analyze everything from call center activity, to web searches, to satisfaction surveys in order to find ways we can support our customers more effectively. Thankfully, our customers take the time to give us feedback, and we take that very seriously, and we listen and apply it.

Q: Has Palm outsourced its call centers or are the overseas call center employees also Palm employees?

A: Yes, we have chosen to outsource and offshore a majority of our technical support. The technical aptitude and average tenure of the agent pools we use offshore are very high. We also supplement offshore service with onshore escalations (which should have been leveraged by the agents in your case). Interestingly, our customer and case satisfaction data over the past year show that the actual difference between our onshore and offshore agent service is marginal — a fraction of a point — so we believe that we are not compromising quality in any real way.

Q: What kind of training does a Palm call center employee customarily receive?

A: All of our agents get an average of three weeks of classroom training per year. This includes technical support training, operating system (Palm OS and WinMo) training, language and cultural skills training, customer service skills training, new product training, product refresher training, and Palm systems, procedure, and policy training. In addition, agents regularly receive intensive one-on-one coaching and mentoring using call recordings, quality monitoring and customer satisfaction surveys.

Q: In my own experience, as well as in other experiences documented online, it appears there have been many instances of Palm call center employees lying to customers. Just for the record, though I suspect the answer will be no, are Palm call center employees asked to lie to customers?

A: We invest a lot of time and energy in providing official scripts, bulletins, knowledge bases, and training that help agents to respond swiftly, professionally, and accurately to the myriad of consumer inquiries that they face each day. They are also encouraged to use our hierarchy of support to escalate calls and questions when they are not informed or positioned to answer — so there is no reason an agent should provide inaccurate information at any time.

In your case, the agent lost control of the conversation, and things were said that shouldn’t have been. These types of cases result in an investigation, and oftentimes interviews with those agents or managers involved.

Q: What would happen to an employee that is found to have lied to a customer?

A: We conduct an investigation — perhaps reading call notes, listening to calls if they’ve been recorded, interviewing agents, and so forth — to get a better idea of what really transpired. We would then follow our established guidelines for discipline, performance improvement, or dismissal.

Q: Also for the record, though I also suspect the answer will be no, does Palm CEO Ed Colligan take call center calls?

A: Ed is one of the most passionate and participatory executives you will ever come across. While I don’t believe he has ever taken a technical support call per se, he certainly will contact a customer directly, and does so all the time. He has a dedicated voicemail box where he receives customer messages that I don’t even have access to. He routinely is responding to not just voicemails but emails, faxes, and letters that come across his desk. And Ed knows the names of these customers, and he looks to me for status updates on how we have handled these cases and whether or not we have restored their trust in the Palm brand. He is zealous about this — and so am I.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Palm responds, Part 1. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

I was first walked through the script by employee C13763, who balked when I told her that I didn’t know the exact date of purchase of my device. Having purchased the device from the palm US store, I thought they could look that up but I discovered that it wasn’t the case. Keeping her on the line while I tried to login in the store, I discovered that palm no longer had any trace of any accounts of mine on their site. With 4 palm devices bought over the last 3 years, I was surprised by that fact, especially after checking the address on the welcome email (palm has a tradition of sending you a welcome note to their world every time you buy another device) and asking for a password to be reset for the email address I had received emails at from Palm.

But at that point, I could say it was all basically my fault for not keeping good records. I asked for forgiveness and gave a date based on my rough rememberance. It was around the end of the year and the Treo 680 has been introduced at a show in New York only a few days before. So I looked up the rough timeline (device introduced late November 2006 and released around December 2006) and gave a date (January 1, 2007). I knew the date was wrong as I had gotten the device later than that but figured I needed to give them a date that was within the range of warranty and on the outside of the date I bought the device.

After doing so, I was told that I needed to do a hard reset (I had already walked through that) and indulged the call center person (I figure they get enough abuse as is). That, of course, did not solve the problem since it was a hardware issue (speaker blown off due to the fact that the volume setting on the palm, if set too high blows off the speakers and the fact that the volume setting buttons do not lock with the rest of the buttons on the device, ensuring that any type of shaking in pockets or bags will ensure that your volume is either set to the top or bottom setting most of the time). After another 15 minutes of walking through the scenario, I was told that the replacement unit would cost me $299.

$299 would not be much of an issue, with one possible exception: the retail price for a brand new, unlocked, Treo 680 is $379. The street price ranges from $200 to $300. A new unit comes with a one year warranty on all parts. A replacement unit does not.

The message this sends to customers is that once you’re a customer, you’re hooked and therefore the company is going to try to milk any profit it can out of you. As a shareholder, I thought this was the wrong message so I asked employee C13763 to transfer me to her superior. After some going back and forth, I was finally transfered to employee C11329, a “senior technician” to whom I referred my case number (case number 1–511-464–84488) before continuing the discussion.

I first voiced my concern about the fact that there was a problem in terms of locating sales data from their own servers. Since I had bought the device from Palm’s website and I had given my serial number while on the previous call, I thought it odd that they could not locate the date of purchase of the device (especially since they consider it such vital data for customer service) . I was told that since my device was sold on January 1, 2007, the date I had given only a few minutes earlier to the previous call center person, it was out of warranty. I’m writing this on December 27, 2007 and, the last time I checked, a one year warranty generally extends 365 days from the date of purchase. My concern as a shareholder now turned to anger and frustration. With 3 other broken palm devices in front of me (2 of them my own fault so I won’t even bother talking to Palm about those), I thought that I could be considered a solid customer. But now I was told that warranties were not real and paying $199 (a drop in price of $100 in only a few minutes since talking to the previous person) was going to solve my problem. In the past, broken devices were repaired for $100 so this was getting closer to reality but I wanted to talk to someone more senior about two problems: first, it seemed that one can give any date and it won’t be checked (or maybe it will) and two, if it is checked, warranty terms do not apply for a full year.

So I asked employee C11329 to be transfered to her manager. She told me she was the most senior person at Palm. I asked her again politely to transfer me to her manager. She told me she had none. I asked to be transfered to the person that was reviewing her work, giving her assignments, etc.. I was told she had none. I told her I felt that was odd as, apart from the chairman and CEO, I didn’t know of anyone in a company not having a manager. She told me she was the CEO.

For a second, I paused. “You’re the CEO of Palm, Inc.?” I asked again, not really believing what I was hearing. “Yes, I am” she replied, now with a defiant tone. “So you’re telling me you’re Ed Colligan?” I asked. “I am the CEO and that’s all you need to know.”

Well, turns out I was now in a very odd situation. I had been at several industry events where Ed Colligan spoke (including a number of product launches from Palm) and, as far as my memory was concerned, his voice was neither feminine nor did it sound south-Asian in its inflection. My memory might have been playing games on me but I was pretty sure I was not talking to the CEO of Palm.

“Do you mind if I start recording this call? I’d like to get your answer to my question about being CEO on an audio record as I’m having a hard time believing it” I asked. The first part of this question is a standard I was taught in journalism school: if you’re going to record a call, first ask if it’s OK to do so. Laws applying to phone taping are a complex mess of regulations with little overlap between different jurisdictions: however, if both parties to a conversation agree to the taping of that conversation, it is generally recognized as OK to do so.

Obviously, I was dealing with someone who knew (or guessed) that I would not legally be allowed to record the conversation so she replied that “no, that would be illegal”. I was stuck so I asked her to transfer me to her manager again. She said no. I asked again with the same result. After another 15 minutes of back and forth, I finally figured that she being CEO, she could transfer me to anyone in the company so I asked to be transfered to the company’s general counsel. The call dropped. I let the line run for another few minutes figuring that maybe it was taking time for the transfer to occur but no, the line went dead.

After a few hours, I realized that while my experience had been horrible, I may have found a great story: PALM, the stock, is not doing so hot. Palm, the company is having its own issues, as are Palm the devices. In the past, the saving grace in all this was that the customer support was very good and decent. So the question is whether tech support (or other forms of horrible customer interactions) could be the straw that breaks Palm’s back. I called Palm’s PR agency to ask some questions about this but most of the people are on vacation. One of their agency’s PR people told me that she’d pass the message on so we’ll see what happens.

On a personal note, I’m joining the many others who are abandoning palm the device. I am also, like Mary Hodder, regretting all the recommendations I made. I’m now shopping for another device and would welcome any recommendation. I also wouldn’t mind getting some information about how other people feel about tech support not only at Palm but also at other unlocked devices sellers. Is unlocked a category of the market that most vendors dismiss, reserving their best services for 3rd party mobile providers and is it something that might change in the future? I don’t know but what I do know is that I am now part of the group of people who must say: “Don’t ever buy a Palm device.”

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Could Tech Support Undo Palm?. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

It’s a very smart move on the part of Apple, which highlighted the change in the way the company is operating by changing its name from Apple Computer, Inc. to Apple, Inc. , reflecting the fact that they are no longer just a computer company.There were a few interesting items of interest, though.

For starters, no mention of how the phone will sync up with a computer. Are we to assume that it’s Mac Only or will it synchronize with computers running Windows too? If so, does that mean that a new set of applications will be available to Windows users to sync their address book, calendar and email with systems like Outlook or will the device require to manage those things specifically using Apple applications on Windows?

The other thing that was interesting is the announcement that the phone will run on quad-band GSM and will be using EDGE network. This means that the phone will get decent but not great data service. Perfect for email and light web browsing but not quite fast enough for video streaming. However, the introduction of WiFi in the device, which many other companies have avoided for fear of losing battery capacity, could take care of that.

The other interesting thing is that the operating system on this device is OSX. This seems to point out to two possible issues: First, what does that mean for PortalPlayer, which has traditionally provided Apple with the operating system (embedded on a chip) for the iPod? The second question is what does it mean in general: What Apple has introduced is basically a mac in a small form factor, which could easily compete with the UMPC specifications introduced by Microsoft. It’s pretty clear that Apple has a lot of plans in the future for that device but they didn’t say much about the significance of OSX, providing it almost as an aside (and what does it mean for the next version of OSX, which was not mentioned during this keynote at all, a surprising omission in itself.)

Who loses?

Judging from the reaction on the stock market, it’s pretty obvious to see who loses: Palm (makers of the Treo), RIM (makers of the Blackberry), and Motorola and Nokia will obviously not be thrilled with the entrance of Apple in this market. The exclusive deal with AT&T (ooops, sorry, Cingular) will also have a negative impact on Verizon, Sprint, and T-mobile as Verizon will see a number of users switching to them in order to get their hands on this device (in informal discussion with a number of fellow geeks, the disadvantages of moving to Cingular were far outweighted by the coolness of this device).

Let’s take a quick look at specs and see how the difference devices fare against this new entrant:

So looking at it, this phone is pretty expensive (you pay for the Apple premium) but packs a lot more features than other phones in the same category. It’s got a better camera, more memory and a larger screen as well as WiFi. It’s talk time (for the category) is actually pretty good (only bested by Nokia’s E-62) and it is a little heavier than the competition. For a first entry in the market, I’d say that Apple has a winner on its hands.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title The iPhone is here. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Priced at $300 for the modem and a $40 monthly rate for unlimited access, the service is still not cheap but it is starting to approach the reasonable area once you realize how much you can do with it.

The basic software package comes with some of the same clips that are available on the Palm VII and a few extra programs like a full mail package which allows you to connect to your POP3 server. However, I decided to get rid of that piece of software once I discovered Ptelnet, a small telnet client for the palm. This allows me to access a Unix server on which I not only have an email client but also a Usenet client, as well as a web browser (lynx) and an FTP client.

As a result, this telnet client works as the perfect on the road kit.

For more graphically oriented pages, I use Proxiweb, a full web browser that allows me to surf web pages directly from my pilot. The proxinet server converts the pages in a format that is easily readable by the pilot.

Of course, one of the main attraction of a wireless pilot is quick access to relevant information. Using Palm computing’s proprietary tools, several companies have developed PQAs that allow users to quickly check certain pages. Amazon.com, for example, allows you to order directly from your pilot, Ebay allows you to track your auctions in progress, and Etrade allows you to trade stocks. However, those are not the applications I found myself using the most.

I’ve discovered that the most interesting ones tend to be the information PQAs. For example, I can now check flight delays at the airport (perfect for travelers), track FedEx packages, get directions using mapquest, or grab headlines from a variety of sources including the New York Times, the Wall Street Journal, and USA Today.

On the more techno-centric end, one can also grab headlines from Slashdot, news.com, and ZDNN. I find myself reading from my connected Palm when I am waiting for a meeting, in transit in a cab, or waiting for a plane at the airport. It’s the perfect way to stay productive wherever I am.

Palm computing knows that in order to keep its lead, it needs to offer tools for developers. As a result, they have introduced a small program that allows developers to create PQAs. The process is relatively quick (put together a few small HTML pages, trim a few images, check your links to make sure that they show up properly on the Palm.) However, one tricky part is creating web server pages that will display properly on the Palm.

I’d like to urge developers to do as much as possible to separate content from presentation when they create pages. In the case of TNL.net, the site is templatize according to one’s browser. So if someone comes in with a Palm (the user agent tag includes the word Elaine so you can clearly get it filtered), I serve up a less graphic intensive template.

This has allowed me to develop a little application allowing people to read this newsletter from their wireless Palm.

As an increasing amount of wireless device start to pop up, separating content and presentation will be increasingly important. The sites that do so already will gain an essential edge in this next section of the market while others will remain far far behind, stuck in legacy HTML code. If you don’t do that separation right now, you will find yourself in tougher and tougher a situation as the amount of content on your site keeps increasing.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Going wireless with the Palm V. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

AOL started moving further on its AOL Anywhere Strategy by announcing partnerships to deliver its Instant Messenger services on the Bell South and Sprint PCS network and to equip Neopoint, Nokia, and Motorola devices with the necessary software to do this too.

Microsoft announced partnerships with Nextel and Airtouch to deliver MSN to their networks. This follows recent announcements by Microsoft that its technology would be integrated in Sony and Quallcom wireless devices.

Meanwhile, Palm Computing announced a deal with Sun Microsystems to make Sun’s iPlanet service available to Palm VII users.

But with all the hype, one has to wonder whether wireless is truly here and what hurdles it has to overcome. From this issue on, I will take a quick look at some of the issues facing wireless web implementors these days, adding wireless as a new category of coverage. We will start with the formats.

WAP, WML, HDML, PQA???

It seems the wireless space in adept at developing a new set of standards. While this world is just burgeoning, a number of implementations have already surfaced.

WAP

: As defined by the WAP Forum, WAP is the Wireless Application Protocol. Think of it essentially as HTTP for the wireless crowd. Backed by the W3C, the IETF, and the ECMA, as well as most large wireless industry players, WAP has become the de facto standard for wireless delivery. However, some companies (NTT comes to mind) have tried presenting alternatives to WAP and have so far been relatively unsuccessful. However, I doubt that WAP will go very far as it limits the number of characters that can be sent to about 1600. For stock quotes or weather reports, it’s a great think but beyond that, I doubt that anyone will use it for Ecommerce or content.

WML

: WML stands for Wireless Markup Language and is an XML based subset of HTML. However, a war as broken out in that space, with phone.com (one of the early pioneers in the wireless space) striking out on its own and developing a competing standard called HDML.

HDML

: HDML, or Handheld Markup Device Language, phone.com proposal for a new markup language. At the current time, the W3C has worked with phone.com and other markup language partners in an attempt to resolve the incompatibilities between the two offerings. With the cachet of WML increasing over the past year, phone.com has started supporting both format but offers HDML has a language with new tags that allow it to extend WML applications. Because it was an early player in the field, phone.com has taken a lead and could be the Microsoft or Netscape of that space. As a result, the extensions they are providing can’t be ignored.

HTML 4.0 mobile

: Last year, with the introduction of HTML 4.0, the W3C made some recommendations in terms of supporting HTML for wireless devices. Throwing further confusing in the wireless space, the W3C decided that HTML 4.0 and its successors might be the way to go, throwing more oil on the wireless fire. While no recommendation has been made yet on an actual standard and in spite of the W3C’s claim that it is working to resolve disputes with the W3C, expect some serious in-fighting between the different groups as they try to position themselves in the next hot web application space.

PQA (Palm Web Clippings)

: A couple of years ago, I pointed out that the Palm OS could be a potential Java competitor in the non-PC devices space. As could be expected, Palm went out and introduced the Palm VII, a wireless device with connections to the web. What was surprising, however, is that instead of going out and supporting either WML, HDML, or even HTML, they decided to introduce their own format to distribute web content: PQA or the Palm Query Application language. PQA is a paired-down HTML version that allows you to distribute content on the wireless Palm platform. Since services like OmniSky plan to offer wireless access to Palm devices other than the Palm VII, and since Palm already has an established footprint in the PDA space, expect PQA applications to pop up left and right.

A lot of format but what do I implement for?

At the current time, it seems there are no clear winners in the space however it seems clear that WAP has a strong lead in the delivery space for small bits of data. But WAP will not be the way to do Ecommerce or content as a clear character limitation makes it fairly useless for this. On the markup front, I’d strongly recommend looking at WML as it has received support from some of the larger players (Microsoft and Sun, among others) and seems to be the basic level of functionality. However, you should also look very seriously at the PQA format because of Palm’s extremely large footprint in the PDA space.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Wireless: A confusing Landscape. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Morphing software

Many of the media seemed to miss the story, however, treating it as just another company announcing a new computer chip. What they missed, largely, is the revolution heralded by Transmeta’s code morphing software. What it does is translate X86 instruction into Transmeta’s native code.

The revolution behind this lies mainly in the fact that this architecture could theoretically allow machines running Crusoe (the Transmeta line of chips) to act not only like x86 machines running either Windows, Linux, BSD, BeOS, or Solaris for x86 but also run code designed for any other chip. All they would have to do is throw in a different version of the morphing software on top of the chip (say, for example a G4 software layer) and run the OS running on other machines.

Logically, what Transmeta has done is simply create the most versatile chip in the industry, allowing it to morph into all the most popular computer chips out there through software emulation.

And because the first translation layer they built is the x86 one, it means that their chip can now power Windows and Linux boxes as well as any Intel chip.

In other words, what Transmeta announced today is that they had built a chip that is what Sun is trying to build with the Java chip, and in the process they have created what is essentially a virtual machine that addresses directly the chip, completely bypassing the OS.

Caching for better performance

Another interesting part of the announcement of an adaptive algorithm in their chip set that caches the most often use instruction sets. As a result, the performance of the chip is greatly increased because the Transmeta software caches the information that repeats itself. In the demo they gave at their press conference, they showed how running a DVD movie on a Pentium III processor compared to running the same movie with the same DVD reader on a Crusoe chip. The difference was stunning. While on the Pentium III, the idle time drop from roughly 90% to roughly 50% for the duration of their running the application, the Crusoe chip first saw a spike to less than 50% for a couple of minutes and then went back into idle mode as all the necessary instructions to run the DVD players had been cached in memory.

The bottom line here is that they have essentially created an adaptive multi-tasking environment on a chip.

Built-in power management

The other thing that was interesting was their approach to power management. For starter, the Crusoe chips do not call on all areas of a processor all the time. Because of the adaptive nature of their memory caching system, they show a major performance increase at a lower consumption rate. According to the Transmeta web site,

When an application doesn’t need peak processor performance, the model TM5400 can save power by reducing its clock speed and voltage. Using Transmeta’s LongRun power management technology, software continuously monitors the demands on the processor, dynamically and smoothly adjusting the processor’s speed to exactly what is needed to run the application.

You probably keep more than one application open on your computer at a time (for example, as I’m writing this, my email client is running in the background, as well as a few browser windows from which I’m getting information) but most of those being in the background, they should take major amounts of CPU. A Crusoe enabled machine would realize that and reduce the voltage consumption of those tasks, therefore increase the battery life on your computer (this is, of course, aimed at the Mobile market Transmeta is going after).

On a regular machine, the chip knows either how to turn a process on or off but not how to degrade it to lower power consumption. As a result, Transmeta has built a better mousetrap.

Upgradeable through the Internet?

Because the core of the chip resides in a software layer that sits above the hardware level, it is possible to create a chip that is upgradeable through the Internet. A few years ago, the first ROM-upgradeable modems came out, allowing users to move from a 28.8kbps modem to an 56k modem by just downloading software. Theoretically, Crusoe chips should be upgradeable in much the same way, which makes for an interesting world where hardware and software become closer.

But why does Linus Torvalds work there?

The question on the mind of hordes of Linux users was why would Linus work at a chip company? Well, today, the answer was given. Along with the announcement of the new chip, Transmeta announced Mobile Linux, a version of Linux designed for systems without hard disks, such as Mobile Internet devices (for example, Web pads, palmtops, etc…)

The principal enhancements for Mobile Linux will be in power management and in the reduction of the memory footprint. So that’s what Linus has been working on all this time, as well as being part of the team that built the morphable software. All and all, one can say that it was really smart of them to add him to their roster of talent, as it will fire up the Linux community to develop for this new version of Linux (and yes, Mobile Linux will be open source).

Style change

In what may be a departure from the industry’s playbook, Transmeta decided to announce the products they had on hand. Yes, the chips are available today (they mentioned that IBM would manufacture some of them) and no, they won’t answer any questions about the future. In other words, this is no vaporware but a very real set of products. This could change the way companies around the industry release their products.

The losers: Palm Computing, Sun, Intel, Motorola and AMD

All and all, this announcement changes the landscape for a couple of major players. For starters, Palm Computing might find itself in the middle of a very big battle. Because of the low power consumption of the Crusoe chips and the introduction of Mobile Linux, it is now possible to envision Palm-sized devices that can run audio and video. This represents a major threat to Palm Computing’s installed base.

Second among the losers today are the chip companies. Because they can run the x86 set, Transmeta’s chips are a potential replacement for Intel and AMD chips in the laptop market. A lot of the problems those chips have encountered is that the higher the processor speed, the hotter the chips run, and the larger the fans that need to be used to cool them. If Crusoe holds up as well as they demoed, Transmeta could capture a major lead in the laptop market. Add the morphing software architecture and Transmeta could also become a competitor to chip makers Sun and Motorola.

Sun is further hurt in the fact that this is a virtual chip that takes away from the concept of virtual machines that Sun pushed with Java. As a result, Sun’s hope of covering the market with Java devices as well as their JINI-everywhere strategy may have to be rethought.

The winners: Linux, Microsoft, Consumers

Linux is a clear winner with the introduction of Mobile Linux, which will strengthen Linux’s gain in the computer market by offering it as an alternative to any other OS in the hand held market.

Microsoft, interestingly, also becomes a winner with this. With Intel making some moves to back alternative operating systems, Microsoft was finding itself in the difficult position of being somewhat subservient to its biggest ally. Yes, there’s AMD but Crusoe is yet another competitor to Intel, which only strengthens Microsoft’s position in dealing with the chip manufacturer. Also, Microsoft gains some advantage here because its Windows OS can now run at better performance levels on handheld devices. Yes, it will have to battle Mobile Linux but this could make the main Windows line (Windows 9x and 2000) an alternative platform in the portable device market, which means that Microsoft could now ditch their efforts on WinCE and still have a card in that new market if they want to.

Consumer also stand to win from this announcement as it heralds a new age of mobility. Soon, a lot of low powered mobile devices will hit the market: Portable DVD players and wireless Internet devices now have more of a chance in the marketplace since they won’t consume as much in batteries. I think we’ll all be happy to see those new devices hit the market.

All and all, it was yet another day when a major announcement changed the computer landscape. Since that’s two major announcements in as many weeks, I wonder what’s going to happen next week.

Stay tuned!

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Transmeta Changes the Landscape. You can follow him on twitter here or receive his weekly newsletter by subscribing here.