Handheld Computing Being Transformed, Handspring Exec Says
January, 2002
STANFORD GRADUATE SCHOOL OF BUSINESS—Handheld computers soon won't be complete without an accompanying cell phone, the chief executive of the world's second-largest electronic organizer maker told a Business School audience. "Handheld computers and telephones are the future of the business," said Handspring CEO Donna Dubinsky. "If I look out five years I don't see any reason to carry a cell phone that doesn't have access to the Internet and email."
Dubinsky, who co-founded Mountain View, Calif.-based Handspring in July 1998, spoke at the Business School Jan. 22 as part of the student-organized View From the Top speakers' series. She is shepherding the introduction of the firm's first wireless communications product, a three-in-one mobile phone, electronic organizer and Internet access device. The $399 Treo is expected to be available to customers via the company website next month and in retail outlets in March.
It's the first product in what she hinted would be several that will shift the company's focus from electronic organizers to wireless devices.
"We're at the cusp of a major change in wireless communications," Dubinsky said. "We are going to be able to carry with us a node to the Internet, which offers enormous product and services potential."
It also opens Handspring to an array of new competitors including mobile phone giants such as Nokia and Ericsson. Dubinsky said she is optimistic that a communications-focused Handspring "has an opportunity to be a leader in defining new products in the space."
Sales of Handspring's personal digital assistants have slowed, due to weak consumer demand and excess inventory, problems that have plagued other makers such as Palm. In the second quarter ended Dec. 29, Handspring revenue fell 39 percent, to $70.5 million from $115.6 million a year ago. The company reported a net loss of $19.8 million or 16 cents a share, compared with a net loss of $15.2 million, or 15 cents in the year ago quarter.
Dubinsky characterized the organizer market as "tough" saying the company had a "rugged couple of quarters." Officials reportedly predict Handspring will reach profitability in the fiscal fourth quarter, on revenue of $86 million to $96 million.
Dubinsky and Handspring co-founder and chairman Jeff Hawkins have a good track record in the handheld computer industry from their days at Palm Computing. They introduced the original PalmPilot in February 1996, creating a successful PDA when heavyweights such as Apple had failed (with the Newton). Palm sold 1 million PalmPilots in 18 months, making it the most rapidly adopted new computing product.
Dubinsky said she learned a valuable lesson while at Palm: "Great products matter. We overcame an enormous amount of skepticism" after the Newton "made it difficult for us." She added that the duo had to "challenge the conventional wisdom" about what a handheld computer should and should not do.
Handspring's first product, the Visor, initially was sold direct via the website (Internet sales account for 15 percent to 20 percent of Visor business). But Dubinsky related how the company fumbled the launch because the site wasn't ready, even though the product was. "It nearly took us down, " she said, teaching executives a valuable lesson in how much details matter in strategic planning. "It was a very harrowing time."
She also told students how Handspring's VisorPhone expansion module, which hasn't been a big seller, has been a "huge learning experience." Treo won't have an expansion module.
Dubinsky joined Palm Computing in 1992, bringing with her more than 10 years of marketing and logistics experience from Apple and Claris. She and Hawkins left Palm to found Handspring after Palm owner 3Com declined to spin off the company. Handspring licenses the Palm operating system.
She is a director of Intuit and earned her B.A. from Yale University and her M.B.A. from Harvard Graduate School of Business Administration.
by Cathy Castillo
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