PDA: PREMATURE DEATH ANNOUNCEMENT
Remember when Apple Computer Inc. introduced its much-ballyhooed Newton personal digital assistant (PDA) last August at a celebrity-studded press conference? The ex- citement faded fast in the face of the public sniping, low sales, and Doonesbury cartoons that made Newton out to be an electronic Edsel. It looked like the quick end of a grand vision--that millions of people would rush to buy handheld devices that recognize handwriting, send and receive messages, place phone calls, and do a little computing on the side.
Not so. Computer makers have plowed too much money and time into developing PDA technology. With Newton's failings to guide them, they've gone back to the drawing boards. Now, a new wave of PDAs is coming. It started in August with BellSouth Corp.'s Simon, a cellular phone that handles faxes, electronic mail, and voice calls.
In the next two months, long-awaited PDAs from Motorola Inc. and Sony Corp. will arrive. They're the first to use software from General Magic Inc. that should make second-generation PDAs more marketable. The Magic Cap operating system and Telescript communications program are also the basis for AT&T's PersonaLink service, an on-line network that can send a message to someone via phone, pager, or PC. AT&T, Motorola, and Sony are all investors in General Magic, an Apple spin-off.
WAITING GAME. These machines--and Simon--emphasize communications. Conspicuously absent: the tricky handwriting-recognition technology that tripped up Newton. Instead of a glorified date book, marketers now say, what people really want is anytime, anywhere voice and data links. "The world is looking to be connected," says Anthony E. Santelli, general manager of IBM's Power Personal Systems Div., which is at work developing a gizmo based on the IBM-Motorola PowerPC chip.
No one is expecting a mass conversion. The new conventional wisdom has a consumer market for PDAs building over six to eight years instead of in two or three, as projected when Newton came out. Scaling back earlier estimates, Forrester Research Inc. says PDA shipments won't begin to spike until 1998, when prices come down from the $700 to $1,000 range to around $300. Then, the market researcher predicts, sales could hit 2.3 million units. In the meantime, manufacturers are carefully aiming at well-heeled traveling executives or specific vertical markets, such as hospitals or claims adjusters.
The PDA world could certainly use a little realism. Apple, after selling only some 80,000 to 90,000 Newtons in a year, laid off 20% of the workers in its Personal Interactive Electronics Div., which makes Newtons. Eo Inc., a startup partly owned by AT&T, sold fewer than 10,000 PDAs in a year and was shut down in July. Intel Corp. just ended a deal with VLSI Technology to develop a PDA chip set. Compaq Computer Corp. canned its Mobile Companion on the eve of shipment: The Newton debacle convinced the PC maker to start over.
PROMISING SOFTWARE. Simon is being hailed by consultants as the first step in reviving the market. The 18-ounce device, designed and built for BellSouth by IBM, has a liquid crystal display with a keypad and touch screen. Owners can send E-mail and faxes over the BellSouth cellular network by touching the keypad and icon-driven menus. Or they can scribble notes with "digital ink," but the computer doesn't try to decipher them. Analysts say its communications capabilities are a huge step forward.
Simon isn't nirvana, though. The list price, for one thing, is high--$899 for subscribers to Atlanta-based BellSouth Cellular, $1,099 for nonsubscribers. And there aren't many applications available for its proprietary operating system.
More promising could be the spate of products based on Magic Cap. The software is meant to work on everything from PDAs to PCs to cable-TV boxes. Magic Cap is almost a year late, but General Magic President Marc Porat says a finished version has been shipped to Sony, Motorola, and AT&T. Consultants and executives who have seen it give General Magic software high marks. "The underlying technology is really exceptional," says Timothy Bajarin, president of market researcher Creative Strategies International. An industry executive notes: "Everyone in the industry is at least looking at it."
The first test of Magic Cap will come in September. That's when Sony plans to bring out a sub-$1,000 device using the software. It can send and receive faxes and tap into PersonaLink services such as on-line investing, shopping, and the booking of airline tickets.
The kind of consumer who needs to trade stocks from virtually anywhere may not care about costs. But cellular phone rates are pricey for data. To cut the cost, Motorola's Envoy PDA will use the company's Ardis radio paging service initially. The trade-off: no voice.
The PDA market could get a big boost from the new wireless technology called Personal Communications Services (PCS). Basically a low-range cellular service for voice and data, PCS promises low transmission costs, broad coverage, and cheap receivers--but not for at least a year.
Meanwhile, even the companies that looked like they were retreating are preparing second acts. Intel says it's developing special versions of its 486 microprocessor for PDAs. Apple is rewriting the Newton operating system with improved communications functions and still holds out hope for a huge
consumer market--someday. "We're going to just keep plugging away," says Apple fellow Steve Capps. "Windows didn't hit its stride for eight years."
A big push could come precisely from Windows. Microsoft Corp. is pressing ahead with WinPad, a PDA operating system that promises smooth links to millions of desktop PCs running Windows. But WinPad is taking a lot longer than expected, and some software developers say it won't be ready until next July. Microsoft reports Compaq, Motorola, Toshiba, Sharp, NEC, Zenith, and Olivetti have all signed up to use the system in future handhelds. But the software giant is taking a cautious approach: "This is not viewed as a consumer product," says David D. Britton, Microsoft's group product manager for handheld systems. "Handhelds are for sales people, traveling executives, and inventory-management professionals."
Underestimating the market's potential could be as much of a gaffe as Apple's initial overhype. "The people who supply technology can neither predict nor control how it will be used," says Richard J. Rosen, president of New York-based software developer Logicom Inc. "No one could have predicted that the PC would create a huge desktop publishing industry. The same holds true for PDAs." Perhaps. But that's a vision that is still several years down the road.
BELL SOUTH Its new Simon is a cellular phone with smarts.
AT&T Working on a phone with computing capabilities, plus a pen-based tablet PC. Both use its PersonaLink wireless messaging service.
SONY Readying a product based on Magic Cap operating software by General Magic.
MOTOROLA Using Magic Cap in its Envoy due this fall. Communicates over Motorola's Ardis network.
APPLE New Newtons target specific markets such as health care. Also developing new operating system.Catherine Arnst, with Amy Cortese in New York and bureau reports