1. Revolution Evolution, Convergence Appliance Ken Wirt SVP/GM palmOne, Inc

2. palmOne, Inc. 2 March 3, 2004 We Hold These Truths to be Self-Evident… ■Convergence is inevitable ■3.7M results on Google ■Phones will cannibalize everything ■Multi-function is better than single function ■More is better ■“Platforms” are the best ■PC, OS, open architecture ■But the signs are not always obvious

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5. palmOne, Inc. 5 March 3, 2004 Survey ■Clock, radio, receiver, TV, VCR

6. palmOne, Inc. 6 March 3, 2004 Survey ■Washer-Dryer vs. pen-pencil vs. toaster-oven

7. palmOne, Inc. 7 March 3, 2004 Survey ■Can-bottle opener vs. Swiss Army knife vs. spork

8. palmOne, Inc. 8 March 3, 2004 Survey ■Phone-answering machine vs. multi-function printer

9. palmOne, Inc. 9 March 3, 2004 Survey ■Phone vs. PDA vs. calculator vs. MP3 ■Signs are more confusing than they seem…

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12. palmOne, Inc. 12 March 3, 2004 Electrification of Steam Power ■Factory laid out with belts connecting “work stations” to steam engine ■No possiblity of “distributed steam” ■Takes 20 yrs (life-cycle of factory building) for electric dynamo to be “distributed” ■Average car has >60 electric motors

13. palmOne, Inc. 13 March 3, 2004 20 Years for Distributed Computing ■My kitchen has >14 computers ■My house has 16 optical drives ■Seems easy to predict, but if you make a wrong turn ….

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16. palmOne, Inc. 16 March 3, 2004 What is the Life-cycle of technology? ■How can we understand the evolution of technology in products? ■How will PCs, PDAs and phones develop in the future? ■What will win?

17. palmOne, Inc. 17 March 3, 2004 Revolution Evolution ■Revolution: Patterns of the past build to the future ■New technologies quickly displace old tech ■But usage model doesn’t change ■Evolution: Takes time for other parts of the system to adapt into a unique solution ■Rebuild the factory for distributed power ■Not a new “solution” until the entire system changes

18. palmOne, Inc. 18 March 3, 2004 Convergence Appliance ■Convergence ■Add more features because “system/evolution” has not developed complete solution ■Value depends on rate of tech change, not combined cost ■Clock-radio=slow, TV-VCR=fast ■Benefit of combination can’t be just “two-in-one” ■Two is harder to use than one ■Calculator in phone

19. palmOne, Inc. 19 March 3, 2004 Appliance ■Segmentation vs. “mass market” ■There is no “mass market” – only undefined markets ■Products diverge through maturity, not converge  Cost of communicating benefits ■Cost vs. Value ■Cost to upgrade is the true measure ■Utility vs. Simplicity ■Simplicity wins every time (all other things equal) ■On-board computers vs. I-drive ■Watch the rear-view mirror – appliances may be gaining on you!

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21. palmOne, Inc. 21 March 3, 2004 Future of Appliances ■WAN networks – not necessarily phones ■E-mail in the sky (keyboard) ■Music in the sky (audio) ■Photos in the sky (big display) ■Everything’s connected ■Storage everywhere – not just the server ■Ala optical – hard drives in everything ■Convergence? ■How to keep everything in sync?

22. palmOne, Inc. 22 March 3, 2004 Because if we don’t ………. Questions?