Handspring Inc.

Topics: Smartphone, Palm OS, Palm, Inc. Pages: 9 (3033 words) Published: August 18, 2005
In 1999, Handspring embarked into the PDA market by introducing its first handheld computing device, the Visor (Hunger & Wheelen, 2004, Case 11, p.11-7). The Visor featured a unique expansion capability attribute that made this product portable yet versatile (Hunger & Wheelen, 2004, Case 11, p.11-7). The initial demand for Visor was strong and the company was overwhelmed with the order fulfillment process. In the summer of 2000, Handspring went public with an initial public offering price of $20 per share (Hunger & Wheelen, 2004, Case 11, p.11-7). A few months later, its stock price soared to $95 per share. As a result, Handspring gained tremendous prestige in the PDA arena throughout 2000 and the beginning of 2001. Unfortunately, Handspring was soon confronted with steep competition from rivals such as Palm and Microsoft. Thus, Handspring was forced to engage in a price war with them in order to secure the PDA market share (Hunger & Wheelen, 2004, Case 11, p.11-7). Pricing wars with Palm had a substantial impact on Handspring's return on investment. Handspring's Consolidated Statements of Operations showed the end of 2001's fiscal year at a net loss of $125,963,000, and a net loss of $1.21 per share (Hunger & Wheelen, 2004, Case 11, p.11-14). While Visor sales were high, net profit was down. To cope with the declining sales revenues, the overcrowded PDA market, and a number of external and internal factors, Handspring had to reinvent its strategies and products to achieve their mission of greater future profitability. The following SWOT Analysis highlights Handspring's resources and competencies as well as its deficiencies:

External Factor Analysis Summary (EFAS)
External FactorsWeightRatingWeighted ScoreComments

O1•Market expansion0.052.00.10Expand beyond consumer market O2•New marketing campaign0.152.50.38Designed to educate and acquire new consumers O3•EAP program0.205.01.00Enterprise Alliance Partnership O4•Increase distribution channels0.052.50.13Neomar, Wireless Knowledge, and etc… O5•Operating system development0.102.00.20Compete with Palm and Microsoft products

T1•PDA competitors0.153.50.53Palm, Sony, Blackberry, Nokia, Microsoft. T2•Price competition for Treo0.051.00.05Well positioned-no pressure from competing products T3•Worldwide market share decline0.101.50.15Less than 15% of total worldwide market share T4•Visor line product termination0.054.00.20Lack of growth, being phased out. T5•Cell Phone Corporations0.103.00.30Competition with already established cell phone market. Total Scores1.00 3.04

Internal Factor Analysis Summary (IFAS)
Internal FactorsWeightRatingWeighted ScoreComments

S1•Treo products0.205.01.00Strong brand recognition S2•Visor products0.052.00.10Strong initially, but declining steadily. S3•Portability and versatility0.104.50.45Pocket size, function expansion modules. S4•Character recognition engine0.052.50.13Innovative feature S5•Experience of executive management0.151.50.23Veterans of the handheld computing industry
W1•Insufficient mobile phone market knowledge0.053.00.15Unable to compete in smart phone market due to lack of experience W2•Sluggish sales/profitability0.152.50.38Continuous net loss since its inception W3•Stock performance0.052.50.13Unfavorable for shareholders W4•Operating system incompatibility0.152.00.30Incompatible with Microsoft operating system W5•Slow growth0.053.00.15Only experienced an approximate 20% growth Total Scores1.00 3.00

Strategic Factors Analysis Summary Matrix (SFAS)
Strategic FactorsWeightRatingWeighted ScoreShort...

References: Hunger, J. D, & Wheelen, T. L. (2004). Strategic management and business policy. Upper Saddle River, NJ: Pearson, Prentice-Hall.
Miller, A., Boehlje, M., Dobbins, C. (2005) Doing the Right Thing. Retrieved August 11, 2005, from Purdue University Web Site: http://www.purdue.edu
Palm (2005). Treo smartphone. Retrieved August 9, 2005, from http://www.palm.com/us/products/smartphones/treo600/
PCWorld. Prototype device delivers more power, but when will it be available? Retrieved August 11, 2005, from http://www.pcworld.com
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