The impact of 9/11 on a company such as Palm is important to acknowledge. Up to this point, these devices were luxury items in the corporate environment – nice to have, but certainly not mission critical. Post 9/11, America was a terrified society, focused on the fundamentals. Against this backdrop, Eric took over as the CEO of Palm once again, to lead another turnaround.
SM: You were back as CEO at this time! EB: Yes, I found myself as the CEO of a public company again in 2001. This was when I focused on turning around Palm. I recruited Todd Bradley to be the Chief Operating Officer; he came out of Gateway and before that GE. He was a very pragmatic, down to earth, get it done kind of executive. We worked well together. I gave him a lot of latitude to run the company on a day to day basis, and helped him recruit some new people.
All of a sudden the company changed its tempo and the culture became much more down to earth; it developed a nose to the grindstone, let’s get it done on time, mentality.
After a few quarters we had regained profitability, expanded gross margins, and increased top line growth. It took a long time because we were pushing up hill; the market was no longer in massive expansion. The brand was a bit stained because we had stumbled with a previous product release. During that time, we learned how to build derivative products without taking too many risks. We learned how to manage the supply chain much better, and we regained operational credibility, and self confidence. As we headed towards the end of 2003, we had decided to make a big bet and decided to re-launch an aggressive wireless initiative.
SM: Is this when the smart phone play began? EB: Yes. Initially we made a smart phone product on the drawing board. Eventually we decided that since Handspring had also stumbled in a bad way, and since they were running out of cash, that we had enough of a cushion to pull ourselves together and acquire smart phone technology from Handspring. Handspring did not have financial cushion, so they were interested in this as well.
SM: Was Handspring’s focus at the time the smartphone? EB: Almost entirely. They had already started their smartphone product; they were a few months ahead of us. We started to seriously explore the possibility of acquiring Handspring which we eventually did in November of 2003. This was a difficult decision to make because it was led by Jeff and Donna, and they had competed against Palm directly. So we were basically buying a competitor, but not for the handheld because that was yesterday’s game.