DG: What's to prevent somebody who is relatively well-funded and has their act together from creating something very similar? What's the competitive advantage that you see the PalmPilot having now and into the future beyond its physical shape?

JH: There are multiple answers to that. I'll have to go through them all because there are a lot. Clearly, it's not just the size, but we do have an advantage in that we do have a much better knowledge base about the usability of the products than it seems like our competitors have. It's part of our culture here, understanding what's important to users and what's not. It's not just size. People can learn that, but we clearly have a head start on that.

One really big area from a technical side is we understood that what we were building would be a platform. It would be a place that people would write software for and add value to. That was something that some of the entrenched consumer electronics companies didn't understand at all: Sharp, Casio, TI [Texas Instruments] and so on. There are a lot of companies that just don't get that, they don't understand the importance of developing tools, the importance of developing communities. This is really the first product in its category you can really write software for. There are literally thousands of people and hundreds of applications written. That's something we've got.

There are obviously marketing advantages of being first and having the right market share. We are recognized as a leader in the category, we have the most customers, the most customer loyalty. People look to us for innovation. We have distribution, which is a big issue. Trying to get distribution for a product that is just like the PalmPilot is hard! Every retailer says "Why bother? It's just like the one I've already got. I'm selling them, and I'm trained on them."

These are all classic barriers. There are some technical barriers in the intellectual property are that I don't need to go into. But we do pursue intellectual patents and so on.

And what else can I add to that list? I think, as I mentioned earlier, we're really early in this business. And you're going to see the handheld market evolve very rapidly. It's going to look very different a couple of years from now. Anytime you have very rapid change, it's an opportunity to cement your leadership or an opportunity to lose it.

And so, I just believe that our organization is very well equipped to do some very surprising, innovative things in this field ahead of our competition. I don't want to say what those are, but we're working on them. You're going to see some of them in the not too distant future. And so it's like nothing is won yet. Even though we have a large market share and we've got all these customers, we could lose it tomorrow. We could make some really boneheaded mistakes. Or we could cement it even further if we make some brilliant moves.

So I'm not sanguine about this being a piece of cake. There is a lot of risk here.

DG: Can you paint a sort of generalist picture of where this kind of thing is going to go two years, five years, ten years down the road? The vision thing.