Palm stock has fallen 99.7% from its 2000 peak. It just did a reverse stock split (to get its share price back above a buck). Palm posted a $259 million net loss last quarter on revenue of $172 million. Oh, and Dell Computer Corp. next month enters Palm's personal digital assistant market using software from rival Microsoft Corp. Yet Palm has managed to generate buzz courtesy of a low-tech gizmo aimed in part at an unlikely target: stay-at-home moms.
Early adopters have adopted, so Palm is adapting with a simplified product, a lower price and expanded distribution. It aims to attract moms (and others) while continuing to offer high-end Palms to the gadget cognoscenti. By fielding the $99 Zire, Palm risks becoming a purveyor of low-cost, low-margin gizmos. But whether or not Zire sells to moms, Palm has passed a critical first test. It's shown a willingness to rethink past strategic formulas to get something going.
Ditto for Sony, which has zeroed in on a fact many advertisers still can't fathom: There's a market beyond 18-49. Conventional wisdom is that consumer electronics buyers are inherently young, but Sony noted 34% of its sales are to 50-plus consumers. These "Zoomers" are targeted in a new Sony campaign.
Sony's ambitious effort to market distinctly to different customer segments is a refreshing approach. Palm's Zire reflects its understanding that technological innovation can also mean removing features and streamlining a product to make it simpler to use.
The low-hanging fruit is gone. So where are the new customers? Marketing and product innovation opens a door to segments that have been overlooked. In a stagnating economy, there's no room for stagnant thinking. Sony and Palm recognize the opportunity.