I sold my few shares of Palm Friday morning shortly after opening. Palm (Nasdaq:PALM) share dropped 29% on Friday after horrific earning outlook (marketWatch). Palm is increasingly likely to say “bye bye” to its loyal customers in a year or two. Quote sobelmedia:
Iâ€™m never going to forget my very first Palm Pilot in 1998â€¦how coolâ€¦it was everything I needed and wanted in a handheld deviceâ€¦addresses, notes, contacts everythingâ€¦and it had the ability to sync with my computer to keep it up to date. Over the years the company changed owners, management, operating systems and the competition heated up all at the same time. Now it appears as though Palm is at the end of the rope and Wall Street is ready to say goodbye.
I think PALM has to blame itself for the recent problem (since webOS based Palm Pre launch at Sprint network last July). I saw the following problems:
1) Product quality, both hardware build quality and software stability issue, and the infamous battery problem (which is arguably fixed by recent webOS 1.4 update, according to PreCentral and CEO Jon Rubinstein in conference call);
2) Marketing and sales: the initial Sprint Ads was creepy, if not disaster. I can understand Palm tries to target women from “avoid clashing with Droid (targeting techies)” perspective. But keep in mind Palm OS is so buggy in the beginning (it still has glitches in recent updates), only techies can figure it out. For ordinary users, they can only go to carrier (Sprint, Verizon) for help.
This caused a related “carrier relations” problem: the attention of sales rep/support people from carriers. The last thing a phone sales rep wants to see is the customer comes back with a problem, or request for return. They can better spend the time selling to another customer. Palm has realized this problem, the recent project Jumpstart at Verizon is to address this problem. But it’s too little, too late. Plus, marketing and sales can not fix a “so-so” product. This brings about another problem: why Palm rushed Pre to market amid all these problems? After all Jon Rubinstein is the “father of iPod”, he should understand the importance of product quality? The answer is: Palm management is under two source of pressures.
3) Pressures: basically Palm management is under tremendous pressure from investors (Elevation Partners, wall street) for a quick investment return, and under tremendous competitive pressure from the existing smartphone players: Apple, RIM, Google and its partners (Motorola, HTC etc), Microsoft and its partners, Nokia, etc. Today I saw an Android app ads at local Bank of America ATM machine. So far Palm does not have customized app from Facebook, Google/YouTube (which iPhone has).
Future of Palm
I think this CNET article Desperate times for Palm said it well.
A sad chapter in the history of one of the computing industry’s most storied companies is about to begin.
At some point, however, it becomes clear that this is the beginning of the end for Palm. Mobile followers have long known that consolidation is inevitable in this market: developers simply can’t support six operating systems and carriers aren’t crazy about subsidizing phones that people don’t want.
The company will live on in some fashion: the product is too good, the engineers are too smart, and the brand still has enough life to attract some attention. It would not be hard for a deep-pocketed competitor–a list that includes Apple, Google, Microsoft, Hewlett-Packard, Dell, Research in Motion, Nokia, Sony, and a host of others–to absorb Palm, and you can bet that Elevation employees are currently preparing copies of Palm’s financial data for potential buyers.