In the increasingly open modern web 2.0 climate one can sometimes get a little carried away and assume that dog-eat-dog ruthless competition between different companies is slowly giving way to a more progressive co-operative atmosphere of integration.
However nobody currently knows this to be false better than the employees and shareholders of Palm, after Apple recently updated their iTunes software to no longer function with the Palm Pre smartphone device. Unsurprisingly Palm's share price plummeted immediately and the company now has a tricky problem on their hands.
For those new to the story, here's a little background info: Palm's Pre smartphone model is an intended rival to the iPhone, and was recently launched with the attractive feature of being able to sync with iTunes. Sales and share prices responded well to this and for a while things looked rosy for Palm. Apple however were not so keen on the novel bit of coding work that the Palm folks had done, and consequently updated their software to block the Palm device.
The problem is that just enough time had passed with the Palm device having the compatibility feature working that plenty of people will have bought a Pre for this reason (plus it is also quite a bit cheaper than the iPhone). Conspiracy theorists will no doubt speculate that Apple, knowing their announcement would hurt their competitor, timed for maximum damage - but such stuff is pure guesswork and probably a little far-fetched in my opinion.
What is undisputable however is that Palm's gamble on co-operation has backfired quite badly, and in hindsight looks like it was always doomed to end thus. After all, Apple's market position in the portable mp3 and smartphone market is dependent on offering very unique products - and not only in terms of design.
iTunes is a key component of Apple's way of maintaining a different product identity for their players (they will never produce a player that works simply as a drag-n-drop portable memory device like Sony's Walkman models for example) and so this aggressively territorial move comes as little surprise to some. Regardless the conclusion is pretty clear - Apple know that they must always stay slightly apart from the rest of the market players in order to maintain their identity. Getting involved uninvited with such characters can only end in tears, as Palm have just discovered...
Dejan Levi
