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 Weight Rating Weighted Score Comments

Opportunities

O1 •Market expansion 0.05 2.0 0.10 Expand beyond consumer market

O2 •New marketing campaign 0.15 2.5 0.38 Designed to educate and acquire new consumers

O3 •EAP program 0.20 5.0 1.00 Enterprise Alliance Partnership

O4 •Increase distribution channels 0.05 2.5 0.13 Neomar, Wireless Knowledge, and etc…

O5 •Operating system development 0.10 2.0 0.20 Compete with Palm and Microsoft products

Threats

T1 •PDA competitors 0.15 3.5 0.53 Palm, Sony, Blackberry, Nokia, Microsoft.

T2 •Price competition for Treo 0.05 1.0 0.05 Well positioned-no pressure from competing products

T3 •Worldwide market share decline 0.10 1.5 0.15 Less than 15% of total worldwide market share

T4 •Visor line product termination 0.05 4.0 0.20 Lack of growth, being phased out.

T5 •Cell Phone Corporations 0.10 3.0 0.30 Competition with already established cell phone market.

Total Scores 1.00 3.04

Internal Factor Analysis Summary (IFAS)

Internal Factors Weight Rating Weighted Score Comments

Strengths

S1 •Treo products 0.20 5.0 1.00 Strong brand recognition

S2 •Visor products 0.05 2.0 0.10 Strong initially, but declining steadily.

S3 •Portability and versatility 0.10 4.5 0.45 Pocket size, function expansion modules.

S4 •Character recognition engine 0.05 2.5 0.13 Innovative feature

S5 •Experience of executive management 0.15 1.5 0.23 Veterans of the handheld computing industry

Weaknesses

W1 •Insufficient mobile phone market knowledge 0.05 3.0 0.15 Unable to compete in smart phone market due to lack of experience

W2 •Sluggish sales/profitability 0.15 2.5 0.38 Continuous net loss since its inception

W3 •Stock