Kessler: Handheld Development Differs from PC

CHICAGO (04/20/2000) - The president of Palm Inc. welcomes competition from Microsoft Corp. in the handheld computer market, but he said the future of such computing will develop much differently from PCs where Microsoft has had most of its success.

Speaking today at Spring Comdex one day after Microsoft launched the Pocket PC -- a competing product in the market now dominated by the Palm -- Alan Kessler said growth in sales of handheld computers will be in vertical markets that have special application needs and in the untapped market beyond middle-aged businessmen who now comprise about half of Palm's 6 million users.

"It ain't about broad-based horizontal applications in the hand-held space," Kessler said. "It is much more focused on specific solutions, and, yes, you may want to read a Microsoft Word document and look an Excel spreadsheet, which you can do today on a Palm, but that's not what's driving the market."

The evolution of PCs was about processor speeds and the capacity of the operating system, but the hand-held market will continue to be different, he said.

"Handheld computing has not, and we will argue does not and will not follow the PC computing model in many ways," Kessler said in the final keynote of the three-day show. "It will need to be fundamentally different to reach those tens of millions of individuals who need to be reached."

Applications that are tailored to help various professionals, such as real-estate agents, firefighters and doctors, do their jobs need specialized solutions, and ensuring that they are developed is one way that Palm intends to go from 6 million users -- about 75 percent of the market -- to 60 million or even 600 million users, Kessler said.

There are now about 65,000 developers working on Palm software applications, an increase of about tenfold from a year ago, Kessler said. The company envisions new applications from games to GPS (global positioning system) locator products that Kessler said would be less like a typical PC's applications and more like a complete package taking advantage of Palm's size and wireless functions.

The company also wants to move into the vast untapped market of people who are not the typical Palm user -- a 42-year-old male earning US$80,000 a year.

"That's where we've been. Where we're headed is millions and tens of millions of users, many who haven't touched a PC, many who don't want to touch a PC," Kessler said.

The potential new customer are not unsophisticated, but are people who don't feel the need to know all the "ins and outs" of a PC, Kessler said.

"These are folks who want something to get the job done to simplify and empower their lives, and they are untapped, and that is the huge opportunity," he said.

The market for hand-held computers is growing at a compound annual rate of 42 percent, with 22 percent penetration expected by 2003, Kessler said, quoting statistics from International Data Corp.

He also said Palm has plans to bring out new features such as a flexible screen, and would also soon broaden the development base by allowing applications in Visual Basic and Java.

Palm, in Santa Clara, California, can be reached at +1-408-326-5000 or http://www.palm.com/.

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