Capstone Project: SWOT Company Profile: Palm, Inc. Current Situation

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SWOT Company Profile: Palm, Inc.

Current Situation:

For the purposes of this short white paper, Palm, Inc. is a manufacturer of mobile products such as user interfaces. In terms of Michael E. Porter's classic Competitive Strategy: Techniques for Analysing Industries and Competitors, Palm, Inc. is using cost leadership, differentiation, and market segmentation in its marketing strategies by trying to optimize its market penetration for a broad basis as well as for market niches (Porter, 1980, 35). However, such a combination of strategies is tricky, with low cost strategies not providing a sustainable cost advantage. This is to be accomplished by its merger with Hewlett Packard and the versatility of the new webOS software for its Palm IIIc UI/PDAs. It is the opinion of this author that due to the generally volatile market in the UI/PDA market, Palm, Inc. is in for a very rough ride in the next fiscal year. This analysis is based upon a general market analysis as well as consumer survey information. While this is partially due to technical and product issues, much is due as well to the generally volatile market situation in a time of deep recession. However, if the market improves, the company's chances might also improve considerably, although much of this will depend upon the buying publics' perception of the market and of the product viability of the Palm IIIc webOS system. If the company launches an immediate public relations campaign to improve its public perception, it might be able to turn this situation around. This is a definite possibility, given Palm Inc.'s access to the deep pockets of Hewlett Packard. The best strategy will be to try to expand market share at the expense of Apple's iPhone 4. This would provide it with an immediate increase in market share. The other companies could be taken on at a later time as the company's fortunes got better or their products could be bought out using Hewlett Packard's considerable financial resources.

SWOT Analysis:

Strengths: Excellent brand identity with a strong reputation

-hardware and software integration for ease of use

-Palm has focused products

Weaknesses:

- Inability to differentiate from competitors

- Low expertise in other areas and functionality

Opportunities:

- Handheld industry is still in flux and currently no company in the industry is standing on stable ground

- Customer does not know what they want, manufacturers have large role in experimenting and determining what the products are, hence shaping the industry

- The company has a highly segmented customer base with very different needs. This creates opportunity for product differentiation, such as for financial services, government, health care, and manufacturing.

Threats:

- High threats from other Palm devices, Pocket PCs (Microsoft)

- Increasing number of competitors at multiple levels

- Incoming competitors are large corporations with big-pocket such as Nokia, Sony, and Microsoft who have a much longer history in the electronics business ("Palm notes," ).

Situation Analysis:

The new Palm's Palm IIIc webOs is the new generation of innovative products that have continued since the debut of its Palm Pilot in 1996. Its products integrate technologies that enhance personal mobile connectivity including smart phones with accompanying software, services and accessories. Its products are sold via the Internet, retail, via reseller and wireless worldwide and at Palm online outlets. The current situation for Palm, Inc. is complicated however. The proliferation of PDA's and the addition of similar functions mean that their advantages and products are easily duplicated and will become so increasingly in the near future. This has been the situation throughout the company's history since it was founded in its first incarnation, Palm Computing, Inc. In 1992. This has caused the company to change hands in 1995 (acquired by U.S. Robotics) shortly before Palm sold its first handheld computer. In 1997, 3 Com acquired U.S. Robotics (as well as Palm). Then in 1999, 3 Com split off Palm as a separate, publicly-traded company ("Palm inc," 2010).

In the highly dynamic and competitive market that Palm finds itself in, its mission is to develop products of superior quality and improved execution. This has caused its strategic vision of merger when necessary to become more competitive and to acquire development capital to remain competitive.

Palm's corporate vision and philosophy emphasizes human resources as playing a key role. It is necessary to be competitive, but this involves eliminating turnover and acquiring and retaining skilled and trained personnel. This brings about Palm need to develop a very robust, open platform, cultivating relationships with third-party application developers to reach this goal (Report). However, this can conflict and become a weakness, as illustrated below. This is why Palm, Inc. is now seeking out relationships with larger companies such as Hewlett Packard. Hewlett Packard acquired Palm, Inc. To integrate the webOS operating system into its planned Android Tablet system ("Hp to acquire," 2010). They are large and efficient enough to be able to share abundant resources and less likely to spin off and become direct competitors. This way, they will retain their technological, collectively developed competitive edge.

Products & Services Listing and Analysis:

The products of Palm, Inc. include the vintage Palm Pilot, Palm Model m500, smart phones and the Palm IIIc webOS portable UI/PDA ("Palm," 2010).

Major Competitors:

Amongst the Palm OS-based handhelds, Handspring was one of its most fierce competitors. This company posed the highest threat to Palm because its products are similar due to the OS and the costs to switch are very low. This industry is dynamic and changing and overlaps with other handheld UI/PDAs. The handheld industry appears to be shrinking as other electronic UI devices add PDA functions to their own products and devices to compete with the Palm Model m500. This is evidently why Palm bought the company out ("Palm announces acquisition," 2009) This is causing major problems for Palm, Inc. competitor Apple as the market share for its iPhone4 shrinks (Madrid, & Madway, 2010).

The strategy of cooperation with large companies in mergers and cooperative ventures backfired in that U.S. Robotics became Palm's single largest competitor. However, with its new product line, Palm, Inc. will now be able to compete head to head with Apple, RIM (Research in Motion) (Tuggle, 2009). It was apparent that Apple, RIM and even Google (now a potential competitor as well) were interested in buying Palm, Inc. The only reason that Hewlett Packard ended up buying it was that it ended up as the highest bidder in the acquisition process. This was due to the amount of intellectual property held by Palm, Inc. And webOS. For instance, Palm held more than 450 patents with more than 400 pending applications. ("Apple wanted to," 2010).

Company View:

Any analysis of a company must analyze information from all sources, especially potential negative information about poor performance. Changewave Research performed a survey of over 4000 prospective smart phone purchasers. This showed poor prospects for Palm's products and predicted a lack of demand for future company devices. While the interest in smart phones is still at an all time high and a rising number of respondents indicating that they planned a near-term purchase. Most of this current demand is driven by the success of the iPhone and various Android powered HTC devices at the expense of companies that include RIM, Palm and Motorola. This was in spite of customer satisfaction indicating that Palm fared third overall with 34% of the current smart phone owners who said that they were very satisfied with their device. This trailed behind the iPhone which tallied 73%. The most troubling for Palm is that nearly none of the respondents planned on purchasing a Palm branded phone in the next 90 days, down from 3% during the first half of the year (Kairer, 2010).

Comparison with the G&O Report:

Considering the current market volatility, anything a year old has to be looked upon skeptically. Understandably, reports take time to put together, but profits can be made or lost almost instantaneously in the present market. With this in mind, section 7A impresses the author with a very pragmatic risk management strategy that includes a lack of derivatives and investments in safe places such as government securities (Palm, Inc., 2009, 67-68). The report itself obviously reflects a very good investment strategy. It is unfortunate that the market situation is making things so difficult for such a well run company.

Conclusion:

Again, it is the opinion of this author that due to the generally volatile market in the UI/PDA market Palm, Inc. is in for a very rough ride in this next fiscal year. The analysis is based upon a general market analysis as well as consumer survey information. While this is partially due to technical and product issues, much is due as well to the generally volatile market situation in a time of deep recession. However, if the market improves, the company's chances might also improve considerably, although much of this will depend upon the buying publics' perception of the market and of the product viability of the Palm… [END OF PREVIEW]

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