Handspring Inc.
Essay title: Handspring Inc.
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 Factors
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Opportunities
•Market expansion
Expand beyond consumer market
•New marketing campaign
Designed to educate and acquire new consumers
•EAP program
Enterprise Alliance Partnership
•Increase distribution channels
Neomar, Wireless Knowledge, and etc…
•Operating system development
Compete with Palm and Microsoft products
Threats
•PDA competitors
Palm, Sony, Blackberry, Nokia, Microsoft.
•Price competition for Treo
Well positioned-no pressure from competing products
•Worldwide market share decline
Less than 15% of total worldwide market share
•Visor line product termination
Lack of growth, being phased out.
•Cell Phone Corporations
Competition with already established cell phone market.
Total Scores
Internal Factor Analysis Summary (IFAS)
Internal Factors
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Strengths
•Treo products
Strong brand recognition
•Visor products
Strong initially, but declining steadily.
•Portability and versatility
Pocket size, function expansion modules.
•Character recognition engine
Innovative feature
•Experience of executive management
Veterans of the handheld computing industry
Weaknesses
•Insufficient mobile phone market knowledge
Unable to compete in smart phone market due to lack of experience
•Sluggish sales/profitability
Continuous net loss since its inception
•Stock