Eric Benhamou: The Saga Of Palm (Part 13)
Check other articles in the series...SM: What is Elevation’s investment thesis regarding positioning? Is it still a prosumer play? EB: The Elevation thesis is pretty simple. It basically says that smartphone market is at its very infancy, and the arrival of the iPhone is expanding the opportunity, making it more real to more people. It is very clear that it is going to be a huge market, and we will see an acceleration from feature phones to smart phones.
There are a whole bunch of stars getting aligned which suggests an acceleration of the market, not just on the device side but Web 2.0 is now a reality in terms of applications and services being available. The transition to 3G is on the way, and we have WiFi networks popping up everywhere. WiMax is more than a distant dream. It is getting rolled out by Sprint and Nextel, also Clearchannel. They are all beginning to create WiMax networks, and of course that is an emerging market as well. We are going to see high bandwidth for devices and a breakthrough market momentum.
We are also seeing a breakthrough in our ability to manage multiple radios. The world will now have a multi-radio environment; a 3G radio, a GPS radio, a Bluetooth Radio, and a WiMax radio all on a single device or a small number of devices where the signal processing is done in a multi-radial world so you can manage interference risks and things like that.
As a result, you will have a very powerful device which will connect wireless with a number of services. There is an acceleration taking place right now which is enabled by infrastructure investments.
It is all good for the market opportunity available to Palm. The Elevation thesis is nothing more than “it is going to be a great market, the company is under executing relative to its potential, due to average operational skills and average innovation capability”. These two things can be addressed. Within the smartphone broad markets, the business use of smart phones is probably where Palm is at its best.
The iPhone is clearly positioned towards the consumer end of things. Unlike Apple, we do not believe in flat keyboards. We believe in keyboards which maximize the ability to enter data which is something you have to do as a business user. Apple maximizes its products along atheistic and multimedia such as music.
We are not creating iPods, we are creating business tools to enhance individual productivity. That will be the primary emphasis.
A huge market, and it is not just products, but it is products and services, and the software that makes it work together. That is the game plan, and I think it is pretty exciting for the company. It is more of an execution play than a strategy play. The strategy is not terribly complicated.
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