Palm Case Study

1) What did Palm do to create a winner-take-all market for itself?

Ans.

After only 18 months on the market, Palm shipped its one-millionth unit in late 1997, breaking an industry record for the fastest time to one million units for any computer hardware product. At the end of 1997, Palm held more than two-thirds of the market. While 500,000 Windows CE based devices were shipped to retailers of distributors in 1997, only about half of those were sold to consumers. In order to come to this level i.e. to create a winner ÐŽVtake ÐŽVall market for itself, the Palm Co. adopted the following steps and strategies:

„« Low prices of their product for building market share

„« Created and released Software Development kits for easier Plam-compatiable applications

„« Strategically managing marketing and sales

„« Familiarity and appealing devices offered to customers

„« Gained more confidence of customers

„« Three quarters of the applications offered by the Palm Co. were shareware, software that could be downloaded for free trial and later registered for continued use for a modest fee.

„« Escalated its efforts to entice developers to write software programs that would run on Palm OS.

„« Announced upgrade options for holders of previous versions of its PDA.

„« It created highest market share for handheld systems by customizing it

All these efforts along with effective control, lead to an overall winner position for the Palm Co. as compared to its competitors.

2) How strong are network effects in handheld computing operating systems, compared to those in the PC's?

Ans.

The network effects in handheld computing operating systems by the Palm Co. were very strong as compared to that of Microsoft. The handheld device offered by the company was much cheaper, small enough to fit into a shirt pocket, simple and fast to use, and able to synchronize with both Windows PCs and Apple Macintoshes. ( share data between the desktop and the PDA device at the press of a button)

Whereas for PCs, the network effects were not too strong.

3) How did Microsoft try to break Palm's dominance of the market?

Ans.

In the year 1996, Microsoft announced its OS for the PDA, Windows CE (consumer electronics) with keyboards. MicrosoftÐŽ¦s marketing juggernaut and money spent heavily by it on advertising and sales. In January 1998, Microsoft launched Windows CE 2.0 which featured