Originating Author: G Berton Latamore
With the introduction of the iPhone and iPod Touch, the announcement of Android, and the fading of once-dominant Palm Inc., the handheld market has been in huge flux in the last year. The latest major change, one long promised, has been Apple's opening of the iPhone/Touch to third-party applications, promising the introduction of exciting functionality behind the revolutionary iPhone interface. Meanwhile, large numbers of developers responded to Google's Android application contest by porting their applications to that platform, even though no actual hardware runs Android yet.
However, the appearance of new applications for the platform does not guarantee that iPhone/Touch users will respond to the opportunity that functionality offers. So far the great majority of smart phone users have ignored the thousands of third-party applications available for Palm Treo and Windows Mobile smart phones. The great majority seem satisfied with the email chat, photo, Web access, and of course voice applications built into their phones. The vast majority of iPhone/Touch users seem to have been happy with the functionality on their until recently closed handhelds, even when Apple purposely “bricked” iPhones running “jailbreaker” programs to allow them to run third-party programs.
To find out what is happening in this market, Wikibon interviewed Morgan Slain, founder and CEO of SplashData (http://www.splashdata.com/about/index.htm), a leading developer of applications for Palm, Windows Mobile, Blackberry, Windows XP and Vista, and Macintosh platforms, with versions for the iPhone/Touch and Android in development. In several cases, the SplashData versions of applications provide the core features that most people want in competing Windows/Macintosh applications such as Quicken and Microsoft Money at a fraction of the cost and size of those products. Before founding SplashData in 2000, Slain worked as a developer for Palm Inc., and he still has a loyalty to that platform. SplashData is privately held, with 15 employees, which makes it one of the larger, more successful companies in a group still dominated by single-person, single product suppliers. In the interview below Slain discusses his expectations for the future of this market, his company's development philosophy and direction, and some of his latest and soon-to-be-announced products.
WIKIBON: What is the focus of your business?
SLAIN: We focus on personal productivity for smart phones and Windows and Mac desktop software. The desktop software is sold both on a stand-alone basis and in versions that link with the handheld systems. Most of our sales are in the consumer market, although our sales to the corporate market are growing steadily.
We are best known for SplashID, which is a password safe with about 500,000 users across all platforms. We also have SplashShopper, which is a list manager; SplashMoney, which is a personal finance manager that resembles Quicken but is a lot easier to use, like Quicken five years ago; and SplashPhoto, a digital photo manager for power users which is one of our most successful products, and we are just about to release a new version of that. If you have a lot of digital photos, and you want to keep and organize them on your PDA or smart phone, you can synchronize them faster with SplashPhoto than with competing software.
WIKIBON: What platforms does SplashData support?
SLAIN: I used to work at Palm, and we got our start on the Palm OS platform, then branched out into Windows Mobile, and then Nokia Series 60, Sony Ericsson UIQ, BlackBerry, and now we're working on iPhone/iPod Touch and Android. We also have Windows and Macintosh versions of our products that are designed either to work with the handheld applications or stand alone.
WIKIBON: Given that you have both Microsoft Money and Quicken on Windows and the Mac as competitors, who is your audience for SplashMoney in the desktop market?
SLAIN: My issue and the issue of a lot of users with Quicken and Microsoft Money is they have gotten so bloated with feature creep that they have become a little hard to use for someone who is just looking for a quick and easy way to balance a checkbook and core accounts like a mortgage. SplashMoney does a really good job of handling those functions, and it has some features you might need, like tracking performance against budget with charts. And it lets you take all that information with you on a smart phone or PDA. It is one of few financial applications that we are aware of on the mobile side that gives you the ability to access your bank account and download your latest transactions on the fly. It really does have advantages over better known applications.
We have a pretty solid user base. We do make a lot of desktop-only sales, but the majority of our customers use it on the mobile side. A lot of customers tend to do most of their activity on the desktop side because it is easier to enter information with the full sized keyboard and then synchronize the information onto the handheld.
WIKIBON: Are you seeing a growth in the corporate market for mobile/wireless handhelds as opposed to the consumer market?
SLAIN: The majority of our sales are in consumer space, but we do have a strong presence in the corporate market. About 20% of our sales are corporate users who buy SplashID, that they use to manage all their passwords and confidential registration codes, and SplashNotes, which is an outlining and note taking application. That has been growing.
WIKIBON: Have you seen any major differences between the consumer and corporate markets in terms of functionality or platform preferences?
SLAIN: I think that the enterprise customers we have are really focused on BlackBerry and Windows Mobile, whereas in the consumer space we still see a lot of activity in Palm and there's tremendous demand for the iPhone version.
Our experience is that BlackBerry is taking off on the corporate side. It's been our fastest growing platform in terms of our software sales, and we are hearing the same thing from a lot of other handheld software companies. Handango is selling a lot of software on that platform as well. Because it has not had a touch screen, the functionality on a BlackBerry is not like it is on a Windows Mobile or Palm device or an iPhone, but it is getting more sophisticated. And they just announced a touch screen.
WIKIBON: Have you recently or are you about to announce support for any new platforms (e.g., iPhone/Touch, Linux, Android)?
SLAIN: We haven't formally announced support for iPhone and Android, but we have let our customers know that these versions are coming on our company blog and our forum.
WIKIBON: How has the predominance of smart phones over pure PDAs impacted your markets?
SLAIN: Well, that's a good question. It's been positive overall because that's where the PDA platforms have migrated. That is where customers have been moving. That said, I think that the traditional core PDA user is more of a technophile who is more likely to seek out additional applications for their device. So the conversion market (of users moving from a pure PDA to a smart phone) is a much stronger market than the pure smart phone market is, especially today with the lower-priced smart phones. So for the manufacturers it’s great that they are getting a lot of new customers, but on the devices we support those new users are much less likely to buy third-party applications than are the traditional users who bought their first PDA back in 1998.
WIKIBON: Do smart phone users use the applications in a different way than PDA users? Are they more likely to use them for reading than for capturing information, for instance?
SLAIN: The key difference we're noticing is that people synchronize the devices via cable [to a PC] less often. That is an issue for us, because we have these powerful desktop applications. It’s influencing our direction in that we are enabling more wireless features in our applications and will have wireless synchronization.
As an example, the new version of SplashPhoto we are coming out with has the ability to upload and download photos to Flicker and Facebook. That’s really the focus for a lot of people in how they manage their photos. Originally we were going down a path of creating a service we were calling “SplashBlog” for people to upload and download their photos, but we realized that we needed to work with the applications that people were actually using rather than trying to create our own alternative. We are really excited about the new version [of SplashPhoto]. We are beta testing it now, and it is almost there.
WIKIBON: Most smart phone users seem to be focused on email, chat, and occasional Web browsing, and of course voice, on their phones – witness the huge popularity of the iPhone despite its lack of functionality beyond these applications. Do you see indications in the market of that changing?
SLAIN: I think it will change over time, and the development of the BlackBerry software market is an indication of that. I think that Apple's launch of its App Store will help that. Certainly when you no longer have to “jailbreak” your device to add a third-party application on your iPhone, users will have a cleaner, more efficient mechanism for adding functionality to their iPhones.
WIKIBON: In the last few years we have seen the fading of Palm Inc. and, most notably, its failure to bring out either the new version of its OS or the much-rumored version of Linux with the Palm application interfaces and GUI. With the advent of the much more impressive iPhone GUI, do you see Palm as in an endgame scenario?
SLAIN: I certainly hope not as I am a Palm alum and user of Palm devices since the late 1990s. I believe in and look forward to seeing the new OS. The truth is their Centro is doing pretty well. They have sold over a million of them. The issue for Palm is [that the Centro] is not nearly as high margin a device as their more traditional PDAs. There's no question that next year with their next OS they will have to be just amazingly brilliant to compete with the next generation iPhone and the BlackBerry devices, not to mention the new Windows Mobile devices.
WIKIBON: I presume that SplashData has taken a close look at the iPhone/Touch since Apple released the specs. What do you think of its capabilities beyond the really impressive GUI compared to WinMobile and Palm? Does it have the guts to perform?
SLAIN: Yeah, I think you will be impressed with the kinds of applications we are making available on the iPhone and iPod Touch. The versions of SplashID, SplashShopper and SplashMoney we are doing for it are the best looking versions we've ever done.
WIKIBON: You recently announced Mac versions of SplashMoney and SplashID. Is this partly driven by the potential iPhone market?
SLAIN: Yes and no. Obviously we are going to use the work we did on the Mac versions to help with iPhone development. But we also have a substantial base of Mac users – about 20% of our base. So we would be supporting them whether or not the iPhone was there.
WIKIBON: What does your Mac version use to sync with the Palm, given that Palm itself has never supported the Mac?
SLAIN: We work with the Missing Sync team. We're based in the same little town here in Silicon Valley.
WIKIBON: You announced support for Android. Google, of course, announced Android with much fanfare some months ago. Are there actually handhelds running Android in the market?
SLAIN: Not yet. I think Google has been brilliant in terms of their launch and announcement of the Android Developer Challenge, which is where they offered big cash prizes for application development ahead of the release of the first devices running Android. What they did wrong is they had a single contest for all developers. You had some big developers like us get involved because we wanted to get in early and to get the opportunity to get some publicity for our Android development. But they gave almost all the prizes to small, independent developers. I think they should have had two classes of competition -- one for the larger developers and one for individuals.
We expect that by the end of the year there will be a device in the market.
WIKIBON: Will Android be able to compete with the Apple devices and upgraded UI on the WinMobile devices when it does appear on the market?
SLAIN: The UI is very strong; I think it's comparable with what you see in the iPhone, especially with the touch version of Android.
WIKIBON: For years now I have heard hints and rumors of Linux appearing as a handheld platform, and of course the Asus Eee PC has gained a lot of attention among Linux aficionados. Do you see any indications of Linux becoming a serious competitor in the portable and/or handheld spaces?
SLAIN: Linux is already a strong competitor in some mobile markets like China and Japan. I think it is finally becoming a significant operating system in the rest of the world. It will take some time to get devices in the market in the United States.
WIKIBON: Finally, do you see handheld-sized Windows tablet computers such as the Sony Vaio UX as representing a serious challenge to the specialist smartphone/handheld platforms in the future? Today these are expensive solutions, but those prices have a way of coming down.
SLAIN: I think there will be a segment for devices like that – people who are power users and have a need for that kind of functionality in a mobile device. I do think that most people will have some kind of a smart phone and some kind of mobile computer and what that mix is will depend on the person. Some users may have a small, easy-to-carry-around phone and a top-notch highly mobile computer, and others may have a fully functional, keyboard enabled smart phone and a ruggedized tablet computer. I don't think there is just one device that we all will have. We will carry a combination of devices.