In the article Innovating for Cash, three business models are discussed: integrator, orchestrator and licensor. Integrators manage all the stages of production and marketing, while orchestrators focus on specific stages and outsource other stages to partners in the production and distribution chain. Finally, licensors deal out innovation to other companies and are hence not actively involved in bringing the product out to market.
Jeff Hawkins successfully launched Palm Computing, Inc, whose product was a personal digital assistant (PDA) which took the idea of GRiD Systems’ Industrial Organizer (Tablet) for personal use. There were several firms that entered the PDA market, including but not limited to Microsoft, Apple, Casio and Tandy.
dJeff Hawkins launched the Zoomer in 1993, in collaboration with Casio and Tandy. Earlier, he had cross-licensed qthe Zoomer with Tandy Corporation. With the Zoomer, he adopted the integrator model. He founded Palm Computing with the intention of focusing on the PDA’s core applications. He licensed in the Zoomer’s OS from GeoWorks. The integrator approach was chosen because the technology was proven, and capital required for manufacture was already in existence. The Zoomer largely resembled the Industrial Tablet which was already being supplied by GRiD Systems; hence, the innovation was incremental, though two separate consumer bases were being catered to. Also, speed-to-market was not critical at the time.
The Palm Pilot was launched in January of 1996 as two models, the Pilot 1000 and the Pilot 5000. The orchestrator model was adopted in this case. Palm developed its own OS, and came up with Graffiti technology as an innovation type, which it employed in the Palm Pilot. Palm Computing was then acquired by US Robotics who agreed to allow it to function in a semi-autonomous capacity, while taking charge of developing the Pilot’s hardware. The orchestrator model was employed because of a number of reasons. There was already a mature supplier/partner base. As a result, Palm outsourced overall packaging and appearance of the unit to a turnkey manufacturing company in San Jose, among others. The technology was still in its early stages, given that Palm had developed its own OS and come up with the Graffiti technology. There was intense competition from other PDAs, including its own Zoomer, which had dictated a need for innovation. Strong substitutes were also already in existence, especially from the traditional modes of paper and pen. Speed-to-market was also critical, and there was a limited budget, which ruled out the integrator model.
The Zoomer ultimately failed because consumers were not accustomed to the pen-based input technology, and there was incompatibility with desktop PCs which the consumer base wanted their PDAs to be connected to in order to sync various services. The product was also a radical breakthrough rather than an incremental innovation, therefore the market was little educated about the PDAs capabilities, and Palm Computing had done little to bring it up to speed.
Having learned from the Zoomer’s failure, Palm Computing designed the Palm Pilot as a follow-up to it. The Palm team undertook a survey to determine what features consumers derived the most utility from. These were connectivity, form factor, data entry and performance. Part of the Zoomer’s failure was attributable to its operating system; hence Palm developed a Palm OS for the Pilot. They made the pilot fully compatible with desktop PCs. They also developed Graffiti input technology which was much easier to use than the erstwhile technology. Given that this product was a radical breakthrough, rather than (though in part) an incremental innovation, Palm took time to educate the market base on the use of the Graffiti technology. The Palm executive team went on a nationwide, 100 editor tour and met with major influencers in the industry, promoting the Pilot. Palm partnered with US Robotics as a supplier, who gave it unlimited access to the supplier base and distribution synergy.