Moving from size to cost, we encounter another item that has always been important in Palm’s success: the price of the units is quite modest compared with other choices. This was true five years ago when a Palm device was half the cost of that of its competitors and it is still true today when Palm devices, whether made by Palm or a licensee, are still much cheaper. (See Table 1-5, which contains a vast array of comparisons.)
We believe that low entry price is a critical part of the equation of a successful handheld. Early adopters will buy whatever new gadget they want, regardless of price—they are by definition gadget fanatics who have to have the latest toys. Mainstream consumers who start using a new electronic device—be it a cell phone, VCR, DVD player, or handheld—seriously consider price. Users debating between a handheld purchase of a couple hundred bucks probably won’t compare it to the possibility of buying a notebook computer instead (around $1000). Once the price of a handheld nudges into the $600 to $800 range then the jump to a notebook computer doesn’t look so large. Furthermore, there are many new customers who will consider a couple hundred dollars to try out a new device and who won’t even stop to look at a device over the magic $500 amount.
Price matters. So the real question becomes, what is the price point that justifies the utility of a handheld? Palm and its licensees set that threshold much lower. This strategy puts handhelds in a lot more hands.