Business 101 (as taught by Palm): Don’t ignore your core users, RIM.

Get out your #2 pencils. Choose the best answer from the options below.

Palm’s biggest mistake with the webOS launch was:

• A.  Poor operating system design
• B.  Lack of apps
• C.  Forgetting their legacy user base of Palm die-hards
• D.  Those freaky commercials

If you read the heading, you know the answer is C (yeah, you can argue for D). Last year, Palm made a critical oversight when they introduced the Pre and Pixi with the new webOS operating system. They ignored their legacy users. Palm OS users were very dependent on Palm’s business-friendly organizer features and the ability to HotSync data with their PCs. As a consumer phone, Palm webOS didn’t offer a native sync with Palm Desktop and lacked core business functionality. The older Palm OS users were business users who were left scratching their heads when they saw the new Pre and Pixi. The end result was that many Palm die-hards felt neglected and lost whatever remaining loyalty they had. And look what happened to Palm.

The launch of the iPhone 4 and influx of dozens of Android-based phones have begun to challenge RIM’s market share in a serious way. RIM’s comeback strategy centers around their new BlackBerry 6 OS (and newly announced tablet, the Playbook), offering crucial improvements in web and media support. BlackBerry 6 OS was launched in conjunction with the BlackBerry Torch.

RIM also introduced a new version of their desktop software, BlackBerry Desktop 6. The older versions allowed third-party vendors to work as an add-in to support and sync data with BlackBerry devices. However, the new BlackBerry Desktop 6 broke support for most third-party add-ins (including CompanionLink, Ilium eWallet, and Ascendo DataVault) with no warning to customers, much to their frustration. Upon upgrading to Blackberry Desktop 6, thousands of users immediately lost crucial functionality.

To further complicate problems, the new BlackBerry Desktop added support for Microsoft Outlook 2010 (used by millions), but only the 32-bit edition. BlackBerry Desktop 6 is incompatible with Outlook 2010 64-bit, with planned support sometime “in 2011”. While RIM has made large strides in improving their platform to stay competitive with Android and Apple, they must not forget that their primary competitive advantage has always been business integration (read also as: business users).

RIM would be prudent to learn from Palm and not ignore their core market of business users. While it’s important for companies to pursue new technologies, completely shunning old customers and the things they value is not a sustainable business plan. RIM would be smart to pay attention to these lessons courtesy of Palm.