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Issue #2003 - 03 (January 2003)
(Updated Jan. 30, 2003)


Subscribers to Palm's Wireless Service Are Going On A Data Diet As An All-You-Can-Eat Plan Ends 

Palm has announced changes to pricing plans for its Palm.net wireless data service. Starting Monday, new customers or those who are renewing the $39.99 plan will see the service change from unlimited monthly access to 1MB of data transfer per month and 10 cents for each additional kilobyte. Subscribers can also get 1MB of data for $34.99 and 8 cents for each additional kilobyte if they agree to a one-year commitment. 

Subscribers who are already locked into a one-year contract will continue to get unlimited access at $39.99 until their contract ends. The service allows Palm's VII series and i705 devices to wirelessly access e-mail and the Web. 

"The plan change reflects additional costs from our wireless service provider, so we are more or less just passing it on," Palm spokesman Jim Christensen said. The Palm.net service uses Cingular Wireless' Mobitex wireless paging network to send and receive data. 

Christensen added that only 4 percent of Palm.net subscribers use more than 1MB of data per month. 

Representatives from Cingular Wireless did not return calls or e-mails seeking comments on price changes. Cingular Wireless is a joint venture between SBC Communications and BellSouth. 

Complaints from some subscribers first started showing up on enthusiast sites such as PalmInfocenter. Alex Slawsby, an analyst with IDC, noted that despite the limited capabilities of the devices that use the wireless service, 1MB of data per month is not very much for subscribers. The Palm VII series and i705 have black-and-white displays and require people to input data using the handwriting tool instead of a keyboard. 

Slawsby said that while more and more devices are using the higher-speed networks for wireless data communications, the slower and older Mobitex network has a loyal following because it has better coverage indoors than the newer networks. 

"However, whether that loyal but smaller user base represents enough of a revenue opportunity to maintain and expand a network remains to be seen," Slawsby said. 

A new Palm device, the Tungsten W, will be available in the first quarter through AT&T Wireless and will run on next-generation General Packet Radio Service networks. The Tungsten W is already shipping in Europe and comes with a color display and a built-in keyboard. 

Source: CNET and Palm.Net

MobileInfo Comments and Advisory: Palm's new pricing plan, motivated perhaps by changes in Cingular's Mobitex network pricing, does not stand to any rational business or marketing reasoning. The proposed plan is wrong (we mean high) for the following reasons:

  1. The base price for the first one MB (4cents a KB) is 40% of the next MB (10cents a MB). In which industry other wireless data is this logic justified unless you were short of capacity and were trying to ration kilobytes among larger number of subscribers. Are we back in 1970s when gas prices jumped through the roof because of Middle East crisis?
  2. It discourages usage beyond one MB per month (500 typical email messages of 2KB each without protocol).
  3. Who knows how does Cingular or Palm.Net count message lengths? Is it just user data packets? We do not think so.
  4. The pricing for the second MB that translates into $100 per MB is exorbitant and a lot higher than competing wireless data pricing plans for 2.5 G Sprint or Verizon.
  5. Tungsten W for enterprise ERP applications like CRM and verticals will not fly  with this price. It could add 25 cents per transaction for wireless data (assuming average of three interactions to complete a transaction - 500 character input and 1500 character output for all three). We find this is five to ten times the network charges (2.5 to 5 cents per transaction) for conventional fixed line private networks. 
  6. If you were to use Tungsten W to send your son's picture to your mom, you will be paying $3.00 for the picture (30 KB). Where is the logic and where is the rational?

We would be interested in reader's views. Do you have comments? Send us an e-mail.

Note: This news release may contain forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of Securities Exchange act of 1934 in USA. Similar provisions exist in other countries. There is no assurance that the stipulated plans of vendors will be implemented. MobileInfo does not warrant the authenticity of the information. Readers should take appropriate caution in developing plans utilizing these products, services and technology architectures.  All trademarks used in this summary are the property of their respective owners.

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