PILOTING PALM PILOTING PALM THE INSIDE STORY OF PALM, HANDSPRING, AND THE BIRTH OF THE BILLION-DOLLAR HANDHELD INDUSTRY ANDREA BUTTER & DAVID POGUE John Wiley & Sons, Inc. Copyright © 2002 by Andrea Butter and David Pogue. All rights reserved. Published by John Wiley & Sons, Inc., New York. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopy- ing, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4744. Requests to the Publisher for permission should be addressed to the Permissions Depart- ment, John Wiley & Sons, Inc., 605 Third Avenue, New York, NY 10158-0012, (212) 850-6011, fax (212) 850-6008, E-Mail: PERMREQ @ WILEY.COM. This publication is designed to provide accurate and authoritative informa- tion in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering professional services. If pro- fessional advice or other expert assistance is required, the services of a com- petent professional person should be sought. This title is also available in print as ISBN 0-471-08965-6. Some content that appears in the print version of this book may not be available in this electronic edition. For more information about Wiley products, visit our web site at www.wiley.com To Dagmar, Julia, and Matthias Butter CONTENTS Acknowledgments ix Note to the Reader xiii Prologue 1 Chapter 1 In the Valley of Dreams 5 Chapter 2 Palm Computing 19 Chapter 3 Donna 31 Chapter 4 Zoomer vs. Newton 43 Chapter 5 The Writing on the Wall 59 Chapter 6 The Zen of Palm 70 Chapter 7 Crossing the Desert 89 Chapter 8 U.S. Robotics 102 Chapter 9 The Shortest Honeymoon 118 Chapter 10 Selling the Pilot 129 Chapter 11 The Eleventh Hour 144 Chapter 12 Inside the Tornado 152 Chapter 13 Microsoft 1.0 167 Chapter 14 Swallowed Whole 179 Chapter 15 Omens 190 Chapter 16 Microsoft 2.0 203 Chapter 17 The Fight for Independence 214 vii viii CONTENTS Chapter 18 Once Again, with Money 225 Chapter 19 Sea Change 241 Chapter 20 Revolving Doors 255 Chapter 21 Zero to Sixty 266 Chapter 22 IPO 283 Chapter 23 Millennium 294 Chapter 24 Uncharted Waters 308 Epilogue 324 Notes 329 Index 339 ACKNOWLEDGMENTS Above all, our gratitude goes to Jeff Hawkins, Donna Dubinsky, and Ed Colligan, who generously and incautiously consented to cooperate with many hours of interviews, which they endured with patience, good humor, and complete frankness. In a very concrete way, they made the book possible. We also owe thanks to these people for sharing their time and recollections in interviews (sometimes many of them): Robin Abrams, Al Ahmed, David Anderson, Vicki Barklow, Randy Battat, Eric Benhamou, Mark Bercow, Monty Boyer, Markus Bregler, Stephen K. Brown, Bill Campbell, Elizabeth Cardinale, Marian Cauwet, David Christopher, Byron Connell, Chuck Corbett, Casey Cowell, Bruce Dunlevie, Martin East- wood, Bob Ebert, Howard Elias, Shawn Ford, Donna Gafford, Mike Gallucci, Jean Louis Gassée, Rob Haitani, Doug Haslam, Ray Ivins, Joel Jewitt, Andrea Johnson, Doris Kanemura, Alan Kessler, Randy Komisar, Doug Kraul, Art Lamb, David T. Lee, Bill MacKenzie, Carolyn Malestic, Ron Marianetti, John McCart- ney, Pat McVeigh, Bruce Mendel, Jack Miller, Daniel Pifko, Kate Purmal, Frank Quattrone, Chris Raff, Dinesh Raghavan, Janice Roberts, Michael Seedman, Andy Simms, Joe Sipher, Bill Slakey, Caitlin Spaan, Janet Strauss, J Tempesta, Karl Townsend, Dave ix