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Can a Hail Mary save Palm? Warning issued

Sections: Cellphones, Communications, Mobile, Smartphones

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Yesterday, Palm issued a warning that their sales fell far from the rosy estimate analysts were expecting. Citing the usual slumping economy, increased competition, and the alignment of Jupiter and Mars, Palm is finding themselves in financial quicksand and their wriggling is pulling them downward quickly. Palm’s warning: “we are off 41%.” Ouch.

Palm announced a contraction of its staff, consolidation of its European unit and their Asian units will take ques from the US offices. The refocused Palm that emerges will be working with the clock ticking as trading of the companies stock yesterday got interesting when it plummeted almost 10%. What can turn this boat around?

If you are of a certain age, then you’ve been waiting for the “new OS” to save the company. Unfortunately, delays in development have left the door open just enough for RIM and Apple to sneak inside. The new OS, if it is to be believed that it is capable, will have to do two things to compete:

  • Be available on a range of form factors, something Palm hasn’t done that well at. BlackBerries come in seemingly thousands of varieties from flip to candybar to touch and are updating them at a blurring pace. Palm hasn’t been good at this in the past; do we believe they can in the immediate future?
  • Is the OS fun to use? Apple has a lot going on, but the underlying factor driving sales is the software makes the experience fun. The Palm OS, back in the day, was efficient, bordering on fun. Can Palm put fun into the mix of their OS and capture some excitement?

That is a mighty tall order for an OS that has been delayed again and again. I believe we are setting the new OS to be the Hail Mary to save Palm. Is that fair? Certainly when work was started on it, it wasn’t intended to save the company, only carry on a the Palm tradition. Could we see Palm drop an Android phone? Would anyone care?

Palm is in a tough spot. I theorized last week that HTC might have some interest in picking them up on the cheap and that maybe the only thing that lies ahead: be bought or die.

Read: [cnet] and [wsj]

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  • Doug Berger

    One thing to add to the list of things they must do for their "new OS" to survive is to create a native App Store that is accessible from both the user's computer AND the device itself. This will help them for several reasons.

    1) App Stores generate money. Apple has picked up some serious loot on their App Store alone. We all know Palm could use another revenue source. Having a bunch of cheapo websites handle all of their Apps is horrible, and is a job that Palm should handle themselves.

    2) Having a "business phone" is no longer a model. There needs to be a way to captivate every type of audience. It needs to be a phone that excites people as well. The Centro excited teeny boppers, but that's it. The ideal phone would be sophisticated, fun, pretty, shiny, and a pleasure to use. People are still buzzing in industry trying to get their companies to let them use an iPhone. You know why? Because it's friggin' cool!

    That's my 2 cents.