Palm’s product schedule went off-track, as they steered consumers off Palm V, an obviously terrific product, without a compelling new product introduction.
SM: Do you think it created market confusion for customers? EB: Yes. It was a sign that the pace of innovation had slowed down. All of the people we had put in place in senior management slots, and the new folks we had hired leading up to the IPO, were not producing what they were supposed to. They were supposed to inject new innovation, create new markets for Palm to go after. We were particularly focusing on wireless; we knew all along that the handheld PDA was going to be supplanted by a wireless handheld phone of some sort. We were not using the words smartphone yet, but we were thinking about wireless capability and wireless access.
We introduced Palm VII which was the first wireless product. It was not terribly elegant, and it used the paging network so you could not do anything terribly advanced; you could not access the web. You could get email and you could look up things, flight information, weather, and stocks – things like that. It could have been a promising beginning, but because the company had other things to worry about in its main business area, this wireless line was not pursued with the vigor it needed. Towards then end of 2001 in the October / November timeframe, the board came to the conclusion that the management team was not going to be able to turnaround this business in an acceptable timeframe. We decided to make a change.
My colleagues on the board asked me to reengage in the company as interim CEO, which I did. I was uncomfortable doing that because it is never good to go back into a company you have once run. It was a difficult time and we had relatively few options. We did not want to try our chance with a first time CEO. The problems were fundamentally basic operational management problems.
SM: The market in the fall of 2001 was after 9/11; was this also problematic? EB: It affected the consumer side. It put things into perspective. Having a handheld to keep track of appointments and contacts was suddenly not as critical.