Palm, Psion Say 3G Price Tag Is No Worry

LONDON (06/14/2000) - Affordable wireless services are coming to the consumer over third-generation (3G) devices, regardless of the high prices being paid for 3G mobile spectrum licenses, the chief executive officers of both U.S.-based Palm Inc. and its U.K. competitor, Psion PLC, said at a conference here Wednesday.

In a market that is split three ways between technology suppliers, network operators and the providers of content and transaction services, the greatest value will lie in the content and transaction arena, Psion Founder and Chairman David Potter told attendees of The Wall Street Journal Europe's CEO Summit on Converging Technologies here in London.

"I have to agree with David; the most important part is the content," Palm CEO Carl Yankowski said. And in order to take advantage of selling that content, Palm is "diversifying into wireless. The goal is to try and take these applications (that are already on the Palm) and meld them into devices" with wireless services, he said.

Yankowski asserted that he didn't believe the recent U.K. auction of five 3G licenses would wind up becoming a hidden tax on the consumer, or even a constraint on competition. The auction netted the U.K. government 22.48 billion pounds (US$35.43 billion).

"I don't think it will be a problem. If we can provide interesting and compelling content, (the cost of the licenses) will be a drop in the bucket," he said.

"Today we charge roughly $40 per month, and we don't want to change more than that. Frankly, you could probably price (services) plus 2 percent or plus 5 percent, and people will pay that if they find value," Yankowski said. "Voice is the real rip off."

The most important question for companies like Palm and Psion isn't the cost of the infrastructure, but "how to get those killer apps out on the market in a friendly way," Yankowski said.

According to Potter, what an operator ends up paying for a license is irrelevant to the market. "They pay their $32 billion or whatever, and it is gone. It is not relevant whether they get a return on their money -- it's not so much an issue for us in the marketplace," Potter said. "The cost gets split up on the value chain."

Though devices using WAP (Wireless Application Protocol) technology will not disappear from the marketplace, both Potter and Yankowski agreed that different devices using 3G technologies will dominate mainly due to the convergence of voice and data.

"I think WAP is very worthy and -- I shouldn't say this -- a little bit boring," Potter said. "Where I'm coming from is the drive for voice over (data) networks."

Thanks to such technologies as Bluetooth and Symbian Ltd.'s software (which Psion licenses) there will be a variety of devices, Potter said.

The question for makers of such devices, according to Potter, becomes how to support an enormous range of standards and how to agree on generic technologies. Those generic technologies are "key to the drive into this market, to agree to those standards by mutual agreement," Potter said.

Yankowski, on the other hand, was not as concerned about coming up with standards for the market. "Due to geopolitical issues, there will be no global standard. It's cultural," he said.

Furthermore, according to Palm's CEO, services are the main issue, not standards.

"I don't care about selling devices anymore; I care about selling services," Yankowski said. "The key thing that we do know is that we need to focus on a great user experience."

In attempting to capture the market, nothing is more important than figuring out how to serve the customer by offering the services and the features that they want.

"Voice and data are coming together, but right now I'm not sure how," Yankowski said, adding that the technology exists to give phone capabilities to the Palm, "but I'm not sure that's what customers want."

Potter played down the notion of competition between Psion and Palm, saying the opportunities presented by the addition of data services to future voice devices will create an enormous marketplace with room enough for both players.

"Put the total sales of Palm ever and the total sales of Psion ever all together and you get a good week in the phone sales business," Potter said. "I think there will be plenty of space in this large market."

Palm, in Santa Clara, California, can be reached at +1-408-326-5000 or http://www.palm.com/. Psion, in London, can be reached at +44-171-317-4100 or at http://www.psion.com/.

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