Wednesday, October 20, 2010

HPalm Fails: Ignores the new Smartphone Paradigm

The HP (formerly Palm) Pre 2 has been announced but not yet launched. It will be a commercial failure.

How can I announce the failure of a product I haven't even touched? First let me add that I'm not saying HPalm won't make money on it (they may) then lets examine the flaws that scuttled the original Pre and have now been unhappily inherited by the Pre 2.

The original Pre launched with arguably the best OS on the market; better integrated and smoother than Android, more capable and flexible than iOS it was an absolutely world class operating system. The reasons Pre 1 was not the smashing success it could have been are:

1. Hardware shortcomings
2. Launching on a second-tier carrier
3. Mediocre Marketing

Point 3 is obvious if you've seen the downright weird commercials that accompanied the Pre's launch.
Point 2 is also obvious, Sprint's smaller user base means fewer potential customers, Sprint does not have the prestige of AT&T or VZW and the cutting edge consumers that Pre targeted are more carrier-prestige aware than most, also Sprint's network is inferior to VZW's and (arguably) AT&T's.
Point 1... this was the single biggest factor in the Pre's mediocre sales and is also probably the most open to debate... so let's talk hardware...

First let's start with what Palm got right. The Pre was the first top-tier smartphone to launch with an ARM Cortex A8 SOC. Definitely no mistake there. It also had 256mb ram, no mistake there; it's keyboard was well executed, no mistake; it looked attractive and fit nicely in your hand... again no mistake there. Palm nailed all the details but failed on the broader, more general points of design, though in fairness to Palm it may have been impossible to spot this flaw at the time the device went into production.

The first jet powered commercial aircraft, the de Havilland Comet, had four jet engines built into its wing roots. Later airliner designs had high wings and low wings, 2 3 or 4 engines mounted inside underneath and on top of the wing, t-tails and conventional tails, subsonic and supersonic cruise speeds. Now there is almost zero variation in modern passenger jets. They are all low-wing, conventional tailed, subsonic aircraft with two engines mounted under the wing. Sure there are a few models that still have four engines but they are the exception and none of them are selling very well right now. Cars have similarly converged to conformity, so have laptops, bubble gum and pretty much every other mature product. The reason all these products now look basically the same is that best has been found, and when you've found best... why go for anything else? Now best isn't the same for everyone so there is room for outliers in all these product categories, but outliers can only ever occupy niches, they cannot hold high market-share positions. With a 3.1 inch screen the Pre 2 is an outlier. The last year has seen a trend to ever increasing screen sizes. First the iPhones 3.5" screen seemed to be the standard, then the Motorola Droid launched with a 3.7" screen and was followed by a string of other 3.7" inch devices, then a slew of 4.0" and above handsets were launched. Currently the Droid X and EVO 4g are the screen size champs at 4.3" each and both are selling faster than HTC and Motorola can make them.
When given the choice between browsing the internet on a 3.1" screen and a 4.3" screen, everyone takes the 4.3" screen, this is hugely important because internet browsing is now a primary smartphone function. Similarly when given the choice between viewing photos or movies on a 3.1" screen and a 4.3" screen, everyone picks the latter again and while not as big a deal as internet browsing this is still a significant issue for many users. 4.3 may not sound that much bigger than 3.1 but you have to keep in mind that this is area (dimensions are squared) so actual screen area on the EVO is (4.3^2/3.1^2) 92% greater than the Pre's (ignoring aspect ratio differences). The advantages of a big screen are numerous and the advantages of a small screen are few, there's a good reason why screens have been trending bigger, it's because they're better at most things for most people. Screen size alone, makes the Pre 2 an "also-ran" device, I would guess that only 3% of prospective smartphone buyers would consider a phone with such a small screen.
The hardware keyboard is also a factor. Apple's original iPhone was greeted with much skepticism for it's lack of a physical keyboard, it was an extremely edgy and innovative move by Apple. And it paid off, good touch-screen keyboards work better than most physical keyboards as I found out after purchasing a D1, this is why most high end smartphones fore-go the physical keyboard. There's still a decent market for smartphones with physical keyboards but it represents only about 10% of the market.

With the screen eliminating 97% of prospective buyers and the keyboard leaving another 90% less than enthused I've got $20 that says the Pre 2 will not achieve greater than a 1% market share. HPalm has ignored the new Smartphone Paradigm, they have not aimed for best in all categories and so they will not be successful. Better luck next time HPalm.

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