Handspring Inc.

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Handspring Inc.

189 Bernardo Avenue
San Francisco, California 94043
U.S.A.
Telephone: (650) 230-5000
Toll Free: (888) 565-9393
Fax: (650) 230-2100
Web site: http://www.handspring.com

Public Company
Incorporated: 1998
Employees: 425
Sales: $370.9 million (2001)
Stock Exchanges: NASDAQ
Ticker Symbol: HAND
NAIC: 334111 Electronic Computer Manufacturing

Handspring Inc. is a leading innovator in the handheld computing industry. The company develops, manufactures, and markets a family of expandable handheld computers for a broad range of markets and customers. Handspring’s flagship technology is the Springboard platform, which provides a simple and easy method for hardware and software expansion. Handspring sells its Visor line of handheld computers, along with a line of Springboard expansion modules and accessories, via its web site and through select Internet and retail partners in Asia, Canada, Europe, Japan, and the United States.

Computers and the Human Brain: 1979–92

In 1979, Jeff Hawkins graduated from Cornell University with an undergraduate degree in electrical engineering. He then went to work at Intel in Oregon, and then in Boston. Hawkins worked for Intel for three years before moving on to GRiD Computer Systems Corp., a small Silicon Valley-based company, in 1982.

GRiD was founded in 1979 in Mountain View, California, by Glenn T. Edens and others. The company was exploring the possibilities of mobile computing, in part to fulfill a growing need within the U.S. and NATO military forces for a rugged portable computer system. The year Hawkins joined the small company, they released the GRiD 1100 Compass, a revolutionary Clamshell-style laptop computer. This innovation was followed by the GRiDCASE 12xx series, the world’s first Intel 8088-based MS-DOS IBM PC-compatible portable personal computer in 1984. A 286-XT version, called the GRiDCASE 1520, came out in 1986, followed by the 1530, a 386DX version, in 1988.

But Jeff Hawkins was interested in more than just creating a mobile computer. He wanted a machine that would respond to the true needs of its users. By day, he worked at GRiD; by night, he studied the human brain. “My ultimate goal is to build a new industry around silicon-based, temporal, auto-associative memories. Products that incorporate these memories will understand the world much as you and I do,” he said in a 1988 interview in Fast Company. In 1986, Hawkins’s wife suggested he go to school to learn more about the brain. Consequently, he enrolled in the Ph.D. program in Biophysics at the University of California at Berkeley, where he studied information processing in biological systems, also known as “computational neuroscience.”

Frustrated with the environment, Hawkins left academia in 1988 with no degree, but with a lot of information on neural networks and pattern recognition. About this time, Hawkins created an algorithm for handwriting recognition, which he called PalmPrint. Hawkins licensed PalmPrint to GRiD, his former employer, and became their vice-president of research. His goal was to develop pen-based hardware and software. The following year, in 1989, Hawkins was successful in his goal, as the company released the GRiDPad 1900, the world’s first Pen-and-Display IBM PC-compatible PC Tablet. Also that year, Fort Worth, Texas-based Tandy Corporation bought GRiD Computer Systems Corp. GRiD was subsequently sold to AST Research Inc. in 1993. That company survived as late as 2002 as London-based GRiD Defence Systems Ltd., which bought out GRiD Computer Systems UK Ltd., and as GSCS Inc. (formerly GRiD Government Systems).

Hands-Down Leader: Palm Computing Inc., 1992–98

Wanting to change the world, Hawkins set off from GRiD/Tandy on his own in January 1992. With funding from Tandy, Merrill Pickard Anderson & Eyre (MPAE), and Sutter Hill Ventures, combined with partnerships involving Geoworks, Tandy, and Casio, Hawkins founded Palm Computing Inc. to create a new type of handheld computing product. He immediately hired Donna Dubinsky to run the company. Dubinsky had previously risen through the ranks at Apple Computer, and then went on to become vice-president of international sales at Claris, before joining Palm. In June 1993, the company hired Ed Colligan, previously vice-president of strategic and product marketing at Radius Corporation, as its marketing manager, and the company’s executive team had formed the triumvirate that would go on to lead both Palm and Handspring to resounding success. Bruce Dunlevie, a venture capitalist at MPAE and a member of the board of directors at Geoworks, also would play a prominent role in Palm and Handspring.

Meanwhile, Hawkins improved on his earlier creation, PalmPrint, when he invented the Graffiti text entry method in 1994. This was a neural network-based handwriting recognition system, which solved the handwriting recognition problem (where such products as the Apple Newton had failed) by asking users to learn a simple method for making letters recognizable by software. That same year, Hawkins defined a short list of design goals for what would become the first PalmPilot, then called “Touchdown.” In addition to incorporating Graffiti, the new device should, according to Hawkins, fit in a shirt pocket, be designed for desktop synchronization, deliver instant performance, and be easily affordable.

By late 1994, Palm Computing was in search of financing to bring the Touchdown vision to fruition. But with the handheld computing industry awash in failed attempts, few investors were eager to jump in. In September 1995, Dubinsky contacted U.S. Robotics to see about investing the $5 million they needed. Recognizing the device’s potential, U.S. Robotics purchased Palm Computing instead, for $44 million in stock, and the name “Pilot” was born.

The race to handheld computing was now finally engaged in earnest. Of course the journey really had its start in the mid-1980s, when a host of companies began investigating the idea of a truly mobile computer that could offer real functionality yet be carried around in a jacket pocket. Over the next decade, both large companies and start-ups had attempted and repeatedly failed to create successful handheld computing devices.

Atari was first, in 1989, with the Portfolio handheld computer, followed by a Hewlett-Packard (HP) calculator with some agenda functions, then the Casio BOSS and the Sharp Wizard series. In 1991, HP introduced the HP 95 LX, a small microcomputer operating on MS-DOS, with a full version of Lotus 1-2-3 embedded in the architecture. Psion, a British company, introduced the Psion 3, which was almost a sub-notebook computer. In January 1992, Apple CEO John Sculley coined the term “personal digital assistant” (PDA), launching a whole new frenzy for handheld computers.

The second wave of handhelds began in 1993. That June, Palm Computing announced that it would be releasing the Zoomer later that year. Apple beat the tiny company to the punch, releasing the Newton that August. The Newton featured handwriting recognition. The use of a touchscreen that allowed a user to scribble on its surface with a pen or stylus changed the paradigm of computing from traditional desktop or laptop computing to “notebook” computing. Zoomer came out in October and was followed by a wave of less-than-inspired offerings from other companies, including AT&T’s EO, IBM’s Simon, Motorola’s Marco, and the Psion 3a, among others. Sharp continued developing its Wizard series while, at the same time, teaming with Apple on the Newton. Casio continued development on its BOSS series, and worked with Tandy and Palm on the Zoomer.

By 1995, approximately $1 billion had been spent and lost in this pursuit, including $75 million by Kleiner Perkins Caufield & Byers at GO Corporation and $500 million by Apple. Companies struggled along with tiny improvements and tweaks here and there and no clear industry segment leader emerged. The next developments would not come until 1996, but some of the pioneers would not be around to see them. GO Computing went under in 1994; Apple’s Newton hung on until 1997.

Palm led the pack of new innovations. The first Pilots were shipped in April 1996, about the same time Microsoft announced Windows CE, a “compact edition” of its popular operating system designed for laptops and handhelds. Due to the failure of earlier handheld computers, sales for the Palm Pilot were slow at the start. But sales took off over the 1996 holiday season, and the company grew at an extraordinary rate. Had Palm Computing been an independent company, it would have been one of the fastest-growing companies in history. The PalmPilot itself became the most rapidly adopted new computing product ever introduced, with more than 12 million units sold by mid-2001. The company also spawned its own software and accessories industry, including the Palm Operating System (PalmOS), which has become the standard for palm-based computers.

Company Perspectives

The Big Idea: To fundamentally change the way people organize, manage and communicate. The Grand Plan: To be the leading provider of handheld computing products. And just how do we plan on doing that? By inventing solutions that enable truly simple organization and that provide easy access to the Web so people can really communicate with each other—from shirt pockets rather than their desktops. To that end we will: I). Build a world-class team. It’s a given, but you can’t succeed without one. 2). Battle complexity. Simplicity is what it’s all about. Because if it’s not simple no one will use it. 3). Think about the future. Build a platform that provides for unique functionality, expands possibilities, offers flexibility and personalization for consumers and developers alike. 4). Never rest on our laurels. Innovate, innovate, innovate. The Daily Mantra: Keep it small, simple, affordable and connected. Those are the principles that inspired the creation of the Visor, and they will continue to drive every future Handspring product innovation.

In June 1997, 3Com Corporation acquired U.S. Robotics, and with it, Palm Computing. U.S. Robotics had let Palm operate independently; 3Com began incorporating the acquisition into its corporate structure, and the autonomy was over. In July 1998, the core team that created the original PalmPilot left 3Com Corporation. Ironically, 3Com spun Palm out again as an independent, publicly traded subsidiary on March 2, 2000.

Springing Forth in New Directions: Handspring Inc., 1998

When Jeff Hawkins, Donna Dubinsky, and Ed Colligan, the core team that developed and marketed the PalmPilot, left Palm/3Com, it was not to retire. The trio, in 1998, formed Handspring Inc., a company dedicated to developing the next generation of handheld computers. The new company secured initial funding from leading venture capital firms such as Kleiner Perkins Caufield & Byers (KPCB) and Benchmark Capital in August of that year, with subsequent funding from QUALCOMM, Inc. in July 1999.

The Visor, Handspring’s first product, was the next step in the evolution of the handheld computer. It first shipped in late 1999. Just as the PalmPilot established an open software architecture for handheld computing, the Visor introduced a new hardware and software platform with its Springboard expansion slot, designed to hold plug-and-play expansion modules. With the slot, the Visor was able to extend its functionality to wireless communications, MP3 players, paging, digital photography, global positioning, or anything developers decided to put into a Springboard module. Handspring garnered the support of numerous third-party Springboard module developers and began selling its own line of expansion modules. Handspring’s third-party developers included Arkon, Card Access, Datastick Systems Inc., EA Sports, Franklin Covey, Franklin Electronics, Geo Discovery, Global Access, Go America, IDEO, Imagi-works, Infinity Softworks, Innogear, Landware, Karrier Communications, Magellan, Margi Systems, Nexian, Novatel, Omnisky, Pacific Neo-Tek, Peanut Press, Pocket Express, Shinei, Sierra Wireless, Sprint, Sycom, Symbol, Targus, Texas Instruments, Widcomm, Xircom, and many others.

The Visor used the industry-leading PalmOS software, licensed from its number one competitor, making it compatible with thousands of applications. The Visor also offered several added advantages, including USB support, enhanced applications, and built-in Macintosh compatibility. With the Visor family of handhelds (which would include a wide range of designs, screen displays, prices, and functionality), Handspring went on to uphold the basic tenets of the original PalmPilot philosophy, while using Springboard to create an open platform with limitless potential.

The year 2000 was a great one for Handspring. It was during this year that the company established regional headquarters in both Tokyo and Geneva. The company had a successful IPO in June, raising approximately $200 million. The company also began its philanthropic work in earnest when it sold the one millionth Visor and the first VisorPhone—a combination dual-band world phone and wireless modem that allowed the user to make phone calls, surf the web, check email, chat online, and more, wirelessly—on eBay. The final accomplishment of 2000 was acquiring Mountain View, California-based Bluelark Systems Inc., developers of Blazer and BlueSky, a PalmOS web browser and proxy server that enabled fast, seamless Internet access from handheld computers.

During 2001, the company established the Handspring Foundation, a fund established to support organizations and programs dedicated to creating positive change in their communities. Ed Colligan was promoted from senior vice-president of marketing and sales to chief operating officer.

Also that year, Handspring announced that it would be releasing a new line of wireless communicator products called the Treo, a device that combines a mobile phone; wireless data applications such as email, short messaging, and Internet browsing; and a Palm OS organizer into one compact device. The first units to be offered for sale anywhere in the world were up for bid on eBay as part of a larger charity initiative by eBay and the Consumer Electronics Association called “Bids to Help Kids,” which featured donated consumer electronics items for bid on eBay. Proceeds went to Big Brothers Big Sisters of America, the nation’s largest youth mentoring program.

By the end of 2001, some analysts predicted that the market for handheld computers would grow exponentially in the next few years, with worldwide shipments expected to reach 63 million units by 2004. Some companies, such as the already established Xybernaut Corporation and InfoCharms, as well as various start-ups, began attempting to bring even the next step—wearable computers. With the technological expertise of the team leading Handspring, the company remained poised to benefit from the upsurge in interest in mobile computing technology.

Key Dates

1992:: Jeff Hawkins founds Palm Computing Inc.
1995:: U.S. Robotics purchases Palm for $44 million in stock,
1998:: Jeff Hawkins and Donna Dubinsky found Handspring Inc.
1999:: Company ships Visor and the first Springboard modules.
2000:: Company establishes European and Japanese headquarters; the company launches its successful IPO on NASDAQ; the one millionth Visor and the first VisorPhone are shipped; Bluelark Systems Inc. is acquired.
2001:: First third-generation Visor is shipped.
2002:: Company ships the first Treo, a combination mobile phone, personal digital assistant, and wireless data transmitter.

Principal Competitors

Palm, Inc.; Hewlett-Packard Company; Compaq Computer Corporation; Psion; Acer Inc.; Casio Computer Co., Ltd.; Ericsson; Kyocera Corporation; Microsoft Corporation; Motorola, Inc.; Nokia Corporation; Research in Motion; Samsung Electronics Co., Ltd.; Sharp Corporation; Siemens AG; Sony Corporation; Symbian Ltd.; Symbol Technologies, Inc.; Xybernaut Corporation.