Handspring and Palm, Inc. A Corporate Drama In Five Acts

The case study “Handspring and Palm, Inc.: A Corporate Drama in Five Acts” follows Jeff Hawkins, Donna Dubinsky, and, later, Ed Colligan from the founding of Palm, Inc., through the founding of Handspring, to the point that Handspring and Palm began considering a merger. It moves fairly quickly from the founding of the two companies (including the details that precipitated Hawkins, Dubinsky, and Colligan’s 1998 departure from Palm) through 2001. In greater detail, it examines the conditions that drove the two rival companies toward a merger. In a relatively stagnant market for personal technology, Handspring lacked the financial resources to launch its next-generation product, the Treo 600; meanwhile, Palm’s market position was threatened by a lack of breakthrough product innovation and viable growth plans. The story is characterized by strong personalities. The core Handspring management team with John Doerr and Bruce Dunlevie, two of the company’s venture capital investors, worked together for over a decade. From the date of its founding, Handspring nurtured a rivalry with its chief competitor, Palm, Inc. Any animosity between Palm’s leadership and the Handspring management team (namely between Eric Benhamou and Donna Dubinsky) was amplified by the business press. By early 2003, Palm, Inc. had stabilized its business, while Handspring found itself in a dire financial situation. Handspring pursued two financing alternatives: a PIPE and a merger with Palm. The two alternatives would have engendered two very different operating states for the company, and the board of directors and management team were fairly evenly split in their preferences for either of the two deals, each of which involved a great deal of uncertainty.