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    Sony Dumps Clie: Winners and Losers

    By
    Jim Louderback
    -
    June 1, 2004
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      So Sonys bagging the popular Clie line in the United States. At first glance, it seems like a terrible setback for Sonys small computer plans, and equally bad for PalmSource. But a closer look reveals that Sonys not getting out of the market for tiny computers—its just changing horses midstream. Heres a look at the big winners and losers, and what it means for you.

      Loser: PalmSource

      Anyway you cut it, this is a terrible blow to the folks behind the Palm operating system. The company has been assiduously courting OEMs and using Sony as an example of whats possible with the platform. Indeed, the Sony Clie devices were always the strongest Palm OS PDAs on the market—at least until the Tapwave Zodiac came out. Its not just a loss of prestige, either—Sony accounted for almost 15 percent of PalmSources revenue last quarter. Ouch.

      Loser: Microsoft

      Why would Microsoft be a loser here? One of the companys biggest competitors is abandoning the market, which should leave more for Big Green. Microsoft should pick up some market share, yes, but the Sony move indicates a decline in the standalone PDA market overall. This is less about Sonys relative strength in handheld computers, and more about a fundamental shift away from single-function pocket computers to PDA/phone combinations. And Microsoft and its partners, at least based on my tests of a recent smart phone, havent figured out how to make attractive and lightweight hybrids. In the end, Microsoft will get more, but itll just be more table scraps.

      Winner: Ericsson

      Sonys partnership with Ericsson has to be one of the biggest winners here. Ericsson was losing market share fast in the competitive handset arena until the two giants merged forces. And as phones and PDAs merge—its happening faster than you might think—this is a big boost for the combined company. So far Ive been underwhelmed by the companys flagship hybrid, the P900. Overpriced, fragile and expensive, it gets very little right. But Sony must have had confidence in products under development. This is very clearly a bet on phone-centric pocket computers, and away from the PDA-centered model.

      /zimages/3/28571.gifClick here to read about analysts take on the announcement.

      Next page: Focus on multimedia.

      Page Two

      Winner: Playstation

      Just a few weeks ago, Sony unwrapped its new PlayStation Portable, or PSP. A true multimedia device, it combines a music and movie player with what is essentially a handheld version of the PlayStation 1.

      Sony had tried to turn the Clie into a media-centric device, and the music and movie components of the handheld were first rate. But ultimately the platform lacked the horsepower and functionality to deliver media in your palm. In addition, Sony didnt control the operating system, which made it more difficult to develop a unique product. The new PSP, though, solves all of those problems: it handles all the media-centric things that the Palm couldnt; its Sonys own invention; and it also plays games.

      Im still skeptical—its new rotating media format smacks of another quasi-proprietary memory stick debacle, and battery life looks to be a problem. But its all Sony, it builds on the wildly successful PlayStation franchise, and it looks pretty cool. Think of it as a Tapwave Zodiac, Sony-style.

      Loser: Apple

      Why would Apple be a loser? They dont make handhelds, nor do they make phones. But I think Apples stunning success with the iPod is actually one of the key reasons Sony is killing off the Clie. Apple learned a long time ago that the PDA market was a great place to lose money and focus. Its not about handheld computers after all—its about media in your pocket. And the company that invented the Walkman should have known better. And now they will.

      What It Means to You

      Now that the Clies dead (at least, in the United States), expect Sony to refocus its portable business on phone hybrids with Sony Ericsson, and portable media and game devices with the PSP. If youre a Clie user, not to worry—Sony will still support the product. If you really want a Palm OS handheld, wait a month or two—youll be able to buy a great Clie at fire-sale prices. I still dont recommend the Sony Ericsson phone/PDA hybrids yet, but just wait until later this year or next year. The new products had better be stellar to justify the Clie move. If youre looking for a portable media player that adds video, Im not sure the PSP will do it, but Im even less bullish about Microsofts upcoming Portable Media Centers. Thats another market that bodes waiting and watching, not jumping. At least, not right now.

      Check out eWEEK.coms Mobile & Wireless Center at http://wireless.eweek.com for the latest news, reviews and analysis.

      Be sure to add our eWEEK.com mobile and wireless news feed to your RSS newsreader or My Yahoo page

      Jim Louderback
      With more than 20 years experience in consulting, technology, computers and media, Jim Louderback has pioneered many significant new innovations.While building computer systems for Fortune 100 companies in the '80s, Jim developed innovative client-server computing models, implementing some of the first successful LAN-based client-server systems. He also created a highly successful iterative development methodology uniquely suited to this new systems architecture.As Lab Director at PC Week, Jim developed and refined the product review as an essential news story. He expanded the lab to California, and created significant competitive advantage for the leading IT weekly.When he became editor-in-chief of Windows Sources in 1995, he inherited a magazine teetering on the brink of failure. In six short months, he turned the publication into a money-maker, by refocusing it entirely on the new Windows 95. Newsstand sales tripled, and his magazine won industry awards for excellence of design and content.In 1997, Jim launched TechTV's content, creating and nurturing a highly successful mix of help, product information, news and entertainment. He appeared in numerous segments on the network, and hosted the enormously popular Fresh Gear show for three years.In 1999, he developed the 'Best of CES' awards program in partnership with CEA, the parent company of the CES trade show. This innovative program, where new products were judged directly on the trade show floor, was a resounding success, and continues today.In 2000, Jim began developing, a daily, live, 8 hour TechTV news program called TechLive. Called 'the CNBC of Technology,' TechLive delivered a daily day-long dose of market news, product information, technology reporting and CEO interviews. After its highly successful launch in April of 2001, Jim managed the entire organization, along with setting editorial direction for the balance of TechTV.In the summer or 2002, Jim joined Ziff Davis Media to be Editor-In-Chief and Vice President of Media Properties, including ExtremeTech.com, Microsoft Watch, and the websites for PC Magazine, eWeek and ZDM's gaming publications.
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