All Treo Products Were Sold Through Wireless Phone Carriers

Handspring started out selling the Treo through its existing Visor distribution channels. This proved difficult for two major reasons. First, there was some customer confusion because customers did not really know where to find the Treo. People dont always think about buying a mobile phone at Circuit City or Office Max.

The other problem was that the retailers could not get used to this business model. Handspring actually had to charge the retailers more than the cost to the end user so that the retailers could discount it with their carrier subsidy. If Handspring had not done this, retailers would have had the same margin on the Visor and the Treo, but when they sold a Treo, they would also have received a subsidy from the carriers. They would have wound up making twice as much money on the Treo as on the Visor.

Because of the consumer confusion and the pricing problems, Handspring decided to sell Treo directly to the wireless phone carriers. The carriers then sold the Treo through their own stores as well as through many of the same retailers that sold the Visor. This solved both of the distribution problems. Consumers were used to shopping for mobile phones in mobile phone stores. When they bought the Treo through a traditional retailer, the subsidy from the carriers would flow through in a normal manner. With the new distribution model, Handspring sold all Treo products directly to wireless phone carriers.