From Hand-helds to Smart Phones — The Pioneers of Palm Inc.

Description

Palm Inc. was the “founder” of an entire industry. In the mid-1990s, the firm developed the first successful hand-held on the market. It became the uncontested leader within the young and extremely dynamic industry within a short time, both with regard to hardware as well as software. By 2010, however, Palm was not in good shape. The new product, a top-notch smart phone, was not very successful and there were signs of Palm’s bankruptcy on the horizon. Palm had been the leader in the market of hand-held computers with high market share and profitability, and a brand name recognition level of which many other firms could only dream. What had happened to Palm?

Learning Objective

The case can be taught in courses on global strategy and international management. It is also applicable for courses with a strong focus on theory. The main emphasis of the case is to help students understand the complex dynamics and their effect on both staying competitive and the required resources and capabilities (thus on industrial organization as well as on the resource-based-view of the firm). Palm, the case firm, is interesting for two reasons. Firstly, Palm’s original industry is nascent and extremely dynamic. This allows for a good discussion on the usefulness of the industrial organization framework as compared to more dynamic theories (population ecology and evolutionary theory of the firm). Secondly, usually students have quite a good understanding of the status of the industry right now (e.g. Apple’s iPhone). This makes discussions particularly rewarding.The aim of the case is to discuss the change of competition and required resources and capabilities within Palm’s industry. Learning outcomes are the following: ·Understand the complex interplay between environment and firm strategy — i.e. contingency theory with its idea of “fit,” as well as population ecology mechanisms. ·Understand that industry evolution has an impact on many industrial organization dimensions (customer behaviour and power, suppliers, substitutes, etc.). ·Understand how difficult it is to delineate an “industry.”Understand simple industry evolution models such as industry lifecycle models and their relevance/importance for explaining firm behaviour and strategy.

Keywords

competitive dynamics Industry analysis Smartphones Strategic change Technological change United States