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Editorial: The power of the Palm brand

Wed May 25, 2005 - 4:40 PM EDT - By Michael Ducker

CanalPDA.com has kindly translated this article into Spanish at this link

Quick question: When people ask you what you are holding in your hand, referring to the Treo, how do you reply?

I have owned a Treo 180, 600, 650, but I have all but given up describing the Treo using the marketing terms PalmOne prefers - "Smartphone" (PalmOne's current market term), "Communicator" (Handspring's original market term), or a "mobile phone with email, organizer, messaging, and web access" (PalmOne's introductory description of the Treo 650). That's all too complicated; the people I run into do not know what a "smartphone" is, a "communicator" makes them think of Star Trek, and the third phrase just loses them in technobabble.

No, when people ask me what my Treo is, I say it succinctly in a way that everyone seems to understand. The Treo is a "palm pilot cellphone". And, even though I feel slightly guilty for reducing my Treo to such arcane terms, instantly everyone knows exactly what I have in my hand.

There is a certain magic to the term "Palm Pilot". There has not been a "Palm Pilot" on the market since 1997 with the US Robotics PalmPilot Pro and Personal editions, but somehow everyone I meet seems to know what that PalmPilot is. To the chagrin of marketers everywhere, the name "Palm Pilot" is stuck in the minds of Americans, and eight years later it still appears to be the dominant term that one can use to describe smartphones and PDAs to people unaware of the latest technology.

It was with great disbelief then, that two years ago in August, Palm announced they would change their name to PalmOne. It was forewarned of course, when Palm announced that they would buy Handspring, the press release noted that the company would be renamed in the upcoming months. But why? As demonstrated in my anecdote, the Palm name has immense market recognition, why would Palm want to give it up? The answer was of course, that the two new companies (PalmOne and PalmSource) both wanted to share the Palm brand, and to do that neither could own the whole thing. The solution devised was to create a new company, the "Palm Trademark Holding Company" that would own the Palm trademark, and then license it back to PalmOne/PalmSource for use in their respective names. That in my opinion, was the biggest mistake in the spinoff of PalmOne and PalmSource.

The mistake was made evident this week, when PalmOne announced that after rebranding their entire company, (complete with new colors), they would purchase PalmSource's 55 percent share in the Palm Trademark Holding Company for $30 million dollars, in order to rename themselves back to very valuable Palm name and a new logo (valued by this transaction at $55 million dollars). PalmSource will now go through the same process that PalmOne just went through; over the next four years rebranding themselves and the Palm OS product to some yet to be announced identity. The new name will not however, contain the word Palm.

The intermediate change was a tremendous waste of time, money, advertising, and market mindshare. PalmOne created a series of airport PalmOne stores, a large magazine ad campaign for the Treo (and the PalmOne brand), and yet another consumer technology company for consumers to become confused with. In the meantime, PalmSource has worked hard to establish themselves as an independent company, and "Palm OS" as a market leading operating system.

With this outcome in mind, PalmOne should have retained the Palm trademark from the beginning. PalmSource could have used the merger and spinoff press coverage as a launchpad for a new distinct operating system brand, and by now could have established that name in the market. PalmOne could have better capitalized on the continued use of the Palm brand name, the name that seemingly everyone knows. Both companies would be in a better situation now had they realized that one of them would end up owning the trademark. (Of course, 20/20 hindsight is always nice to have).

Perhaps there is a greater motive in this transaction. PalmSources' last yearly revenue was $73 million. With payments from selling the Palm brand worth almost $9 million a year, PalmSource has effectively increased their revenue 12.5% - not bad for a company that (from my understanding) is struggling for resources. This extra boost of cash may be what PalmSource needs to effectively develop the next generation Linux based Palm OS, competitive with Windows Mobile and Symbian.

Lastly, maybe I am exaggerating the differences between the PalmOne and Palm names. According to Ed Colligan, CEO of PalmOne, the Palm brand holds the traits of "Innovation, power, ease of use, and elegance". The PalmOne brand, according to Ken Wirt, who at the time was a Vice President held the traits of "Energy, enthusiasm, power and innovation". There is a lot of overlap within those two descriptions, and I think I like the idea that the company which is making increasingly complex mobile managers and smartphones will again identify with a name that pushes simplicity and ease of use over energy and enthusiasm. Once this name change stabilizes, maybe I won't need to feel guilty over calling my Treo a Palm Pilot; or maybe by the time the brands stabilize, enough people will finally understand how cool and powerful a smartphone is without furthur elaboration.

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