The goal in this loop is to improve the perception. Thus, more innovations are required. However, there is not a clear-cut reinforcement mechanism, if only because the industry is highly competitive and many firms are viewed as innovators. The perception of being innovative in the smartphone industry is more of a hygiene factor than anything else -- you need to be an innovator to even be in the market right now. Thus, while Palm may focus on improving its perception as an innovator, this does not create a reinforcing loop.

What Palm needs right now is to take advantage of the opportunities that these loops and the interference of HP in these loops provide. The company is now aware of the relationships that form the foundation of these two loops. It understands that perception must match reality with respect to the company's innovation in order to attract not only better...
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