Palm Cafe serves up hand-held romance

Customers wooed at Palm Cafe

PDA on tap: To let customers try out its technology, palmOne Inc. has opened eight Palm Cafes across the country, two of them in Maryland.

January 20, 2004|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

The tall metal tables with the umbrellas look like those at an oceanside resort, where you'd sit down and have a frothy drink.

But instead of being on a tropical beach, these tables are in the middle of Towson Town Center. And instead of drink menus at each seat, there are the hand-held computerized organizers, known in the technology world as personal digital assistants (PDAs).

The Palm Cafe is a retail concept created by Silicon Valley-based palmOne Inc. as it attempts to ramp up marketing of its products in the face of a shrinking market and stiffer competition.

It's a concept other technology companies adopted in recent years to better introduce their devices to consumers. Apple Computer Inc. opened a store at Towson Town in 2002.

The cafe allows consumers to try out the devices for as long as they want - to browse the Internet, check e-mail or play video games.

"We wanted to get it into people's hands," said Kanwal Sharma, director of the Palm Cafe project. "A lot of people are still adverse to technology. We wanted to give them a place where they could become comfortable with the product."

Palm helped popularize the use of the hand-held device with its launch of the Palm Pilot in 1996, but its grip on the market has been loosened.

Palm accounted for 54 percent of the worldwide PDA market last year, down from 84 percent in 1999, according to IDC, a market research firm in Framingham, Mass.

At the same time, hand-helds have become less popular with the emergence of smart phones - cellular phones with many of the functions of a hand-held.

Worldwide shipments of hand-held devices reached a high of 13.6 million in 2001, but are expected to drop to 11.9 million in 2007, according to IDC.

"A lot of manufacturers are finding that consumers would like to carry just one device rather than carry a mobile phone and their hand-held," said Dave Linsalata, an IDC analyst.

As one way to better compete in the market, the company formerly known as Palm Inc. acquired challenger Handspring Inc., last year and split into two companies: Palm- Source Inc. and palmOne Inc. PalmSource makes the operating system for hand-helds. PalmOne Inc. manufactures the hand-helds.

The cafes are another piece to the strategy. Palm opened its first cafe in San Jose a year ago. It has eight throughout the country, including four in California.

The other four are in Boston, New Jersey and two in Maryland - the one in the Towson mall kiosk and another in Montgomery County. The company said it chose Maryland because of the area's high levels of income and technology use.

The Towson location on the mall's fourth level is a neighbor to high-end stores such as Coach Inc. and is near the Apple store and Sharper Image, other upscale electronics retailers.

The cafes are still in the pilot phase, and the company will monitor their sales impact before expanding the concept. During two months in business, the Towson location sold $59,000 worth of merchandise, manager Chris Johnson said.

The company hopes to attract a new customer who might be drawn to the mall, but not typically to an electronics store where most hand-helds are sold. Many of Palm's new customers are women, the mall's biggest customers, Sharma said.

"When you take out that `geek factor' and bring it into a space that is comfortable for everyone, great things can happen," he said.

The kiosks also allow Palm to be center stage, rather than in a display case surrounded by its competitors.

Even if people don't buy directly from the kiosk, Palm is hoping it will drive sales elsewhere. A company survey found that 30 percent of customers who stopped at the cafes bought a Palm device at another store.

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