This hatchet job might be the handiwork of Bono‘s Elevation Partners, which recently took a stake in Palm, and more specifically Jon Rubinstein, a former Apple executive who ran its iPod division before joining Palm as Executive Chairman as a part of that private equity investment.

The press release insists that there will be a FOLEO II while giving no specific timeline.  This is really just code for a little bit of face-saving for Hawkins, who is practically beatified in Silicon Valley along with iPod creator Tony Fadell.

While pulling a product so soon after launch may look like a bit of a black eye, the other option (ceding reality to their competitors while pushing a product that no one can see a use for) was probably far worse.  At any rate, it’s a reminder of the fact that Silicon Valley culture can be far too inward-looking.  Spend any amount of time there and you start to assume that the regular world is just like it, and the cold reality for Palm is that the Wal-Mart nation has much different, less complicated needs, and that product designers need to engage themselves as much as possible with the general public.  As I tried to point out on FoRK, if you only build products for people like you, then you should only expect to sell them to people like you.  Empathy is a key character trait of good product designers, and if your lifestyle, wealth, society, and work separate you substantially from the real people who live in the mass market, then it becomes extremely difficult for you to remain empathetic to their daily problems, needs, dreams, and challenges.

Apparently there just aren’t too many people like Jeff Hawkins anymore.

Thursday March 28, 10:00 am Eastern Time

Forbes.com IPod Redux By Ari Weinberg

Apple Computer ‘s iPod portable MP3 player debuted to rave reviews last fall. The newest version, released last week, does little to diminish the applause.

But it’s not yet deserving of a standing ovation.

The new iPod doubles the storage capacity to 10 gigabytes (roughly 2,000 songs) and adds 20 equalizer presets. That extra space comes at a cost. The 10 GB version retails for $499, $100 more than the original. Like the original, you can try to compare the Apple (NasdaqNM:AAPL – news) to the under-$400 20 GB offerings from SonicBlue (NasdaqNM:SBLU – news) and Archos. But you really can’t.

That’s because iPod still has limited Windows compatibility. It’s a shame considering that the vast majority of personal computers are Windows machines. Some third-party developers have come out with Windows-based software and firmware (for the iPod itself), but Apple has yet to reveal any plans for Windows compatability, though the company is rumored to be working on just such a product. The company is rumored to be hammering out a Windows solution, but that involves some mighty concession from both Apple and Microsoft (NasdaqNM:MSFT – news) .

Right now, Apple’s proprietary FireWire connection port is its leverage. FireWire transfers data at roughly 30 times Universal Serial Bus (USB), the current standard for interdevice connections for PCs and older Macs. The iPod’s FireWIre connection can tranfer 2,000 songs in 20 minutes. For a USB MP3 player, that would take ten hours. But as more portable devices–like digital cameras and camcorders–come with FireWire capacity, the Windows machine cartel may consider small concessions too keep the high-end digerati happy. The pressure is on Apple to play ball. Of course, it would be silly to assume that the minds at Microsoft and Intel (NasdaqNM:INTC – news) aren’t hammering out a technology to blow by FireWire.

Though many iPod owners use the device as a portable hard drive–which it is–the iPod was built for music. So why is Apple touting the introduction of new software that allows the iPod to display address databases from Palm (NasdaqNM:PALM – news) and Mac?

Could the iPod be Apple’s doorway into the crowded personal digital assistant market? Let’s hope not. Apple has a hit going with iPod’s current design and format–to try to morph it into an upscale PDA could be a Newton-sized mistake.

Related Links at Forbes.com

Management & Trends Palm, Handspring Should Merge Lisa DiCarlo, Forbes.com, 06.08.01, 1:30 PM ET

NEW YORK – If Palm and Handspring have any hopes of maintaining the handheld platform’s dominant market share and opening new markets, they should swallow a little bit of pride and merge. It’s the best way to capitalize on their respective strengths.

Both companies are hurting. On Thursday, Handspring (nasdaq: HAND – news – people) said it would miss fiscal fourth-quarter revenue targets by more than 50%. Chief Executive Donna Dubinsky cited price pressure from Palm (nasdaq: PALM – news – people) and new product introductions coming from Japan’s Sony (nyse: SNE – news – people). That came a few weeks after Palm said its fiscal fourth-quarter sales would be half of expectations, and that its pro forma operating loss would be twice as big as it had earlier predicted.

First, consider the increasing competitive pressures. After a few false starts, Microsoft (nasdaq: MSFT – news – people) has finally gotten it right with its PocketPC platform, which rivals Palm’s operating system (OS). Several big PC makers, including Compaq Computer (nyse: CPQ – news – people), sell PocketPC-based personal digital assistants (PDA) and have made inroads into Palm’s market. Domestically, the Palm platform lost four market share points in the last 12 months to 79%, while PocketPC gained a few points to 12%, according to International Data Corp.

IDC analysts say that Palm will lose more market share in 2002, citing the better opportunity for PocketPC to make inroads to large corporate customers.

Now consider the synergies between Palm and Handspring. Palm’s primary function is software development and licensing. PalmPilots were the first successful handhelds because the software was simple to use. Palm continues to sign up software developers to write applications for the platform, as well as computer companies to bundle it with their devices. On June 1, it signed on Taiwan’s Acer, which will build devices for the Taiwanese and Chinese markets.

Handspring is a licensee of Palm’s OS, but most of its innovation has been in the device itself. Its Springboard modules plug into the Visor handheld, transforming the PDA into, among other things, an MP3 player, cellular phone or global positioning system. The beauty of it is that users don’t have to add any software or reconfigure the device.

If they did merge–and there has been no speculation that they will–one piece of the company would focus on software development and global licensing of the platform; the other would develop and sell devices with unique features à la Springboard. The combination of resources would blunt Microsoft’s growing piece of the handheld pie, give it better economies of scale and, with nearly $2 billion in sales, could give it the clout to penetrate large enterprise accounts.

Palm is the larger company by a factor of almost three, in terms of sales. As of March, it had $595 million in cash and equivalents, compared to $107 million for Handspring. Shares of both companies have been pounded, with Handspring and Palm down 61% and 78% respectively, from year-ago levels.

There is value in what both companies bring to the market, but it won’t be fully realized if they continue independently.

Blackberry picked to be the American I-mode By Om Malik Redherring.com, December 05, 2000

Michael Dell has one, Marc Andreessen does not leave home without it, and it is a must-have accessory for every Wall Street investment banker. It’s not the American Express Platinum Card; it’s a lowly two-way pager, which also sends and receives email.

The esoterically named Blackberry — a cross between a personal digital assistant, wireless email device, and pager manufactured by Research in Motion (Nasdaq: RIMM) — is one of the hottest devices in North America, with more than 200,000 sold, mostly to on-the-go corporate types. And those sales have happened primarily through word of mouth, a marketing coup that might be considered the hardware equivalent of Napster’s success.

At a recent Churchill Club gathering in Santa Clara, California, Kleiner Perkins Caufield & Byers partner John Doerr — arguably the second-most powerful man in technology, behind Bill Gates — described the Blackberry as “the I-mode of North America.” (I-mode is the popular wireless service from Japan’s NTT DoCoMo; with handsets that resemble the smallest American cell phones, I-mode devices are the most common method of accessing the Internet in Japan.)

Mr. Doerr was pretty much on the mark. Soon, with America Online (NYSE: AOL) and Yahoo (Nasdaq: YHOO) pushing the consumer version of the device into the market, the Blackberry is likely to become a household name. Last week, AOL said it will use Research in Motion’s hardware and customize it as the AOL Mobile Communicator series of handhelds. AOL subscribers can purchase the device for $329.95 and pay a monthly $19.95 subscription fee to access the wireless service. Given AOL’s reach, that could add a few hundred thousand Blackberry devices into the market. PC makers Compaq Computer (NYSE: CPQ) and Dell Computer (Nasdaq: DELL) have signed up to push the device to their customers for a piece of the action.

For Jim Balsillie, chairman and co-CEO of Research in Motion (RIM), these are the salad days. For nearly 12 years, the Waterloo, Ontario-based company has struggled in anonymity, hoping that one day it would become the darling of the Silicon Valley crowd.

His wish has been granted. RIM stock has been on fire for much the year — rising 44.6 percent, giving the company a market capitalization of about $5.3 billion.

COMPETITION HEATS UP The Blackberry created a market that everyone else is chasing. Motorola (NYSE: MOT) is hoping for similar success for its new Timeport pagers. But even its neon colors, lower price, and Hollywood push (MTV veejay Carson Daly is a pitchman for the product) may not be enough for Motorola to combat its Canadian rival. Palm (Nasdaq: PALM) and Handspring (Nasdaq: HAND) are also adding such features to their products, but RIM has a nice head start.

Looking to expand quickly, the company has just expanded into Europe. BT Cellnet, a subsidiary of British Telecommunications, is going to sell the device in England and Europe. All this expansion is, of course, going to take a big bite out of the company’s profits.

While sales are expected to rise to $189.3 million in fiscal 2001 (ending February 28, 2001) from $85 million in fiscal 2000, RIM will report a loss of $9.7 million for fiscal 2001 versus $10.1 million in net income in fiscal 2000, according to Merrill Lynch estimates. Merrill analyst William Crawford predicts that by fiscal 2002 RIM will be in the black again, posting a net income of $9.5 million on sales of $344.4 million.

Red Herring recently caught up with Mr. Balsillie and talked about the future of RIM and the viral marketing of the Blackberry pager.

Q. Can you explain what makes Blackberry so hot?

A. There are two reasons why Blackberry has become so popular. First of all it, is always on and always connected, so you can get your email anytime, all the time. Secondly, it is an extension of your desktop. Everyone else wants you to have another email address, while Blackberry does not require [it].

Q. Why are you simply focusing on the hardware device and not offering services on top of your platform?

A. Part of our value-add is that we do not contend or compete with the existing player. If it is an Internet service provider (like AOL) or a portal (like Yahoo) we simply extend their platform. We do one thing — the hardware — and we do it very well. I think the embedded antenna, long battery life, and ease of use are because of our focus.

JAVA IS KEY Q. So what are the new applications currently under development that will give more oomph to the Blackberry?

A. Since we use a Java virtual machine at the core, half a million Java developers can develop applications for Blackberry quite easily. More than 10,000 of our software development kits have been downloaded so far. So you will see people like Aether Systems (Nasdaq: AETH) and ETrade (Nasdaq: EGRP) develop stock-trading applications. Others are developing a personal wallet for the device. Of course, Yahoo and America Online are offering their own services (such as instant messaging).

Q. Java seems to be the key here.

A. The developers do not know what environment to write for, and they are confused. I think that is why a lot of wireless devices are embracing Java, so that developers can write applications which can run anywhere. We were the first, and now other wireless devices are doing the same.

Q. You must be coming under a lot of competition, especially since Palm and Handspring have started offering their own wireless services and are working with the wireless ISP Omnisky (Nasdaq: OMNY). And they seem to be cheaper.

A. I think the comparison is unfair, because we are a personal information manager, wireless email device, and pager all rolled into one device for $399. Now if you took the others and added the cost of a modem, their solution is more expensive than us.

Q. What about Motorola, which has new two-way pager-wireless devices on the market that are being touted by Hollywood celebrities?

A. Motorola is selling a pager, a very simple device, which runs on a legacy network and has limited functionality.

Q. What’s next for RIM?

A. I think with the America Online and Yahoo thing, the consumer push is a huge area. Secondly, we are about to start integrating with Lotus Notes. These are two major developments for us, and of course there is the expansion into Europe.