[Nieuws] interview met Ed Colligan (Palm's CEO)

Talking Up New Treo,
Palm CEO Bets Big
On Smartphones

By PUI-WING TAM
May 15, 2006; Page B1

Ed Colligan joined start-up Palm Computing Inc. as its 20th employee in 1993. Today, as the 45-year-old chief executive, he is betting the mobile-device company's future on a gadget called a Treo in a cutthroat competition against established cellphone makers.

The Treo -- a combination cellphone and hand-held computer that allows users to make phone calls, send wireless email and play digital music, among other things -- has supplanted the Palm Pilot, a hand-held organizer, as the Sunnyvale, Calif., company's signature product. The company, now known as Palm Inc., said in the most recent quarter reported that Treo generated around 75% of Palm's $388 million in revenue, up from 46% a year ago. The company plans to unveil its newest Treo, the 700p, today.

In making so-called smartphones, Palm is taking on bigger and more established rivals such as cellphone makers Motorola Inc., Nokia Corp., and BlackBerry maker Research in Motion Ltd. One of Palm's largest individual investors urged Mr. Colligan and the Palm board to sell the company before it's squashed by bigger rivals. But Mr. Colligan shows few signs of wanting to sell.

In a recent interview with The Wall Street Journal, the Palm CEO discussed the company, touching on such topics as its push for smartphones, how consumers use mobile devices today and features of the Treo 700p. Excerpts:

WSJ: Why is the company focused on smartphones now rather than hand-held organizers?

Mr. Colligan: Opportunity. Some 800 million cellphones a year get sold. That's a pretty staggering number. Our thinking is that more and more people will demand the kind of functionality [from their cellphones] that you guys are using on your BlackBerrys -- access to sophisticated computing applications. And what we think we do really well is to take those applications and make them simple [on devices like the Treo].

WSJ: Many people carry around several mobile devices -- a hand-held computer, a cellphone, and a wireless email device like the BlackBerry. Is the smartphone the one device that will replace those multiple gadgets?

Mr. Colligan: Anytime you get into any business segment that has hundreds of millions, if not billions, of people buying these devices, the chances that one size fits all is zero. So there are still going to be stand-alone devices. There are going to be people who prefer just to have a music player. Some will say I want the world's littlest phone. ... So on some level I think there will be a lot of different things. But there is also a high probability that one of those things will be one of the more sophisticated cellphone devices.

WSJ: How do you compete with mobile-phone makers like Nokia and Motorola, which are far larger than you? Do you sell now and cash in?

Mr. Colligan: Whenever you have really fundamental changes in the functionality of devices, there are always opportunities for new entrants to play. And sometimes the large incumbents have a hard time making the transition. Sony was the leading brand in mobile music five years ago. The Walkman was everywhere, everybody had one. Who is the leader today? Apple. And what has fundamentally changed about that technology? Music got digitized, but really it is still the same basic usage pattern -- people want to walk around and listen to music. So you can argue that Sony should have owned that space, but a whole new entrant really changed the game.

I think we're possibly looking at a similar thing here with mobile phones, where the computing side of these devices is going to be more important and the user experience on them -- things that we are really good at. We sold 600,000 devices last quarter. We're going to come out with four new smartphones this year. So we have focus. If we execute really well, we have significant growth ahead of us.

WSJ: How much do you worry about Research in Motion?

Mr. Colligan: We've been gaining a lot of market share on them. We've gone from basically nothing to 30%-plus of the market here in the category of mobile email devices. But hey, you know what? They've executed really well. And they did a great job focusing on that application [wireless email] and delivering a solution. We will have to fight to take them out.

WSJ: Can you tell us something about the new Treo?

Mr. Colligan: We've added green and red send/end buttons because millions of cellphone customers expect that. We added an EvDO radio which delivers DSL-like speeds to your pocket so people who try Web browsing will be blown away with the ease and speed. You can actually use the real Web on this phone, not just some selected sites or sites "dumbed-down" for slow phones. We also put the user manual right on the phone with easy navigation so you can learn more about the capabilities when you're on the move.

WSJ: Can you see having TV or movies play on the Treo?

Mr. Colligan: We do have TV today that can play on the Treo. We don't promote that a lot. It is a reasonably small application and it is also OK -- not great -- today. So we haven't made it a core part of our communications or positioning. But there is no question in my mind it is going to come. And it will be compelling.

WSJ: Do you see yourself like Apple cutting deals for proprietary content?

Mr. Colligan: It's not a track that we've gone down yet. Today, our customer target is very much the pro-sumer [professional consumer] and enterprise business customer. In the wireless email market, our estimates show something like 700 million email boxes used in business on a daily basis around the world. And if I am incredibly generous, we and others have penetrated 2% of that. So I say why should I focus on TV when I have this huge running room and space in wireless email?

WSJ: With only 1,000 employees, how do you organize and create devices that people will think are the next great thing?

Mr. Colligan: We have a real culture of innovation. It's kind of in the DNA now. We have Jeff Hawkins, who is probably one of the premier inventors ever. He started and founded Palm. He built this kind of critical-thinking capability in the company. And we have a process, and we have a roundtable. We look at new technologies. We discuss those. We percolate those up. We decide which we are going to focus on in any particular product or design.

We have hundreds of engineers and product-marketing people thinking about this. I would say that if I looked at who are the really great product people at Palm, there are probably 20 people that consistently meet on a weekly basis at the roundtable. And we discuss both our existing products and what's happening with them and what we are going to do in the future.

WSJ: How are consumers actually using their mobile devices?

Mr. Colligan: The only thing that surprises me consistently is how little they use the devices. There is so much capability that 90% of people don't discover. They say, "It would be really cool if you had a MP3 player in here." We do.

Many people use the Treo as a phone. People come to me all the time and say, "I love this thing, it has changed my life. I just run my whole life with it." I'll get their device and I'll go into it. They have 12 addresses in it and a few appointments. ... Essentially, the devices are almost too complex for a lot of people. And it is one of our challenges.

Write to Pui-Wing Tam at pui-wing.tam@wsj.com