General Magic Has New Tricks Up its Sleeve

Company Restructures and Plans Innovative New Strategy

The PDA market has proved to be unforgiving to a number of companies. Just ask Apple Computer, Geoworks, and most recently, General Magic. Each has been forced to rethink, to various degrees, their approach to the handheld market. Apple, for example, refined its positioning of the Newton to more closely match the more traditional early adopter of computing technology: the corporate user. Likewise, Geoworks is working with its partners to cast GEOS as the ideal low-power platform for communication and information appliances. Each of these companies is banking on precisely this strategic nimbleness to carry them through the early stages of what many have forecast to be a very promising industry.

General Magic too is beginning to taste the harsh reality of the mobile world. Despite developing some of the most innovative technology in the past decade, the company is beginning to realize that unless it acts quickly to make its offerings more appealing, the world may simply pass it by. In question is how to best market its two flagship products, Magic Cap and Telescript. As you’ll recall, Magic Cap is an operating system, user interface and, as the acronym describes, a Communicating Application Platform. Telescript, on the other hand, is an agent-based, intelligent network architecture that effectively turns a normally passive network into an application platform capable of performing arbitrary functions.

An Uncomfortable Embrace

Up until now, Magic Cap and Telescript have been very closely tied. In fact, it has been impossible to get Magic Cap without the Telescript features and support. For example, the two primary hardware platforms currently available—Sony’s MagicLink and Motorola’s Envoy—have featured Telescript as an integral feature of the communicators. The problem with this approach is that by closely associating the two, it has stymied sales of a truly revolutionary operating system. This is because Telescript-based networks are proprietary and not universally available, making the appeal of a Magic Cap-based device something short of compelling unless you buy into the whole concept.

In fact, neither Sony nor Motorola has made any serious effort to market their respective devices outside of the US market, which just happens to be the home of the only commercially available Telescript-based network, namely AT&T’s PersonaLink Services. People in neighboring Canada, not to mention Europe and Asia, have been frustrated by this seemingly arbitrary factor. In the meantime, everyone has watched multiple communication standards grow and flourish at all corners of the planet. Now it’s evident that General Magic has been paying attention as well.

The Birth of New Business Divisions

In an attempt to better serve both markets, General Magic has decided to restructure its operations into two market-focused business divisions concentrating on Magic Cap and Telescript respectively. The Magic Cap division is being managed by Steve Schramm, vice president and general manager. Schramm previously served as the company’s vice president of engineering. On the other side, Lucia Hicks-Williams will assume the same position in the Telescript division. Hicks-Williams was vice president of product marketing and strategic planning before taking this new position. Both new VP’s will initially report directly to Marc Porat, chairman and CEO, until General Magic is actively recruiting for a senior vice president that will preside over the two divisions.

Focus, Focus, Focus

By uniting Magic Cap and Telescript, it’s likely that each division will be able to apply its concentration and considerable engineering talent to bring customer responsive products to market in a more timely manner. Outwardly, each product has suffered slightly by a bit of finger-pointing in the other direction, most recently when company officials claimed that the Windows version of Magic Cap was being delayed partially due to the difficulty in scaling up the current Telescript server software to support a substantially greater number of users. Presumably, both divisions will now be able to focus on bringing forth the best of each technology.

However, this strategy is not without its own challenges. By unbundling Magic Cap and Telescript, General Magic is slightly diluting its message that intelligent communication is an essential component, and that Telescript best represents this new paradigm. It’s also not clear how hardware manufacturers will react to this new divisional structure.

With respect to existing and potential network service providers, was AT&T in the US, NTT in Japan and France Telecom across the pond, unbundling the technologies may be both helpful and harmful: helpful by potentially allowing more people to taste the power and innovation inherent in Magic Cap, but ironically harmful if these new users decide that next-generation communication capabilities are not necessarily for them.

Win or lose, General Magic has an excellent product which deserves renewed exploration of novel alternatives to get the message out.

General Magic
420 North Mary Avenue
Sunnyvale, CA 94086
(408) 774-4000
(408) 774-4014 (fax)
http://www.genmagic.com