Palm Pilot and Apple Newton : the Slow Pace of Fast Change

The difference between success and failure of an innovation in the marketplace can be quite subtle. The outcome cannot always be explained by a pivotal turn in the road, by one brilliant maneuver or by a single overwhelming mistake. Consider the case of the Personal Digital Assistant (PDA), an innovative appliance that has made major inroads into worlds dominated by the personal computer or by the wireless phone. Among PDAs, two well-known names stand out: the Palm Pilot, that put this product category on the map, and the Apple Newton that gave birth to the PDA name itself. Both the Palm Pilot and the Apple Newton were attempting to disrupt a similar status quo. Each had a network of market participants whose current behaviors locked-in a status quo. These included:

Thought leaders, e.g. the IT/high-tech community and media
Investors and internal stakeholders
Complementary technologies (big players), e.g. manufacturers of adjacent and complementary hardware products such as smart phones and information appliances, software providers, PC-OEMs
Complementary technologies (small players), e.g. third-party developers
Sales and marketing channels · End-user segments

Both came upon a status quo where the end-user's behavior was the most crucial: it was this player's historical behavior with regard to managing personal and professional information that needed changing for these new appliances to take hold. In terms of the remaining parts of the player network, apart from the usual questions that surround the introduction of a new product, the good news was that the supply-side community was already in a frame of mind to be open to bold bets. Many among these were, of course, wary of bets that would threaten their incumbency positions.

The Palm and the Newton, while similar in many respects produced very different endgames. The following table captures the differences in terms of the behaviors of each member of the player network.

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How did such different endgames come about? It is instructive to follow the paths of the two from status quo to their respective endgames. The first series of figures traces the path of the Palm Pilot captured in six distinct snapshots.

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Now contrast this path with the one taken by the Newton in the following five snapshots - and the outcomes that followed.

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Many factors contributed to the divergent paths. Palm's positioning as a complement to the reigning PC and its emphasis on a business model that leverages a wider network was instrumental in its success. On the other hand, the Newton had to contend with several issues: its competitive positioning vis-à-vis an established equilibrium, its positioning to an end-user segment (in education) with a product that would be hard for the channels to sell because of its high price, as well as the confusion created across the player network by its many organizational changes.

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