Wall Street

How Did Palm Lose the Smartphone Market?

February 28, 2010 Joshua M. Brown

I thoroughly enjoyed Eric Savitz‘s Can Anyone Rescue Palm ($PALM) from its Death Spiral in this weekend’s Barron’s.

Savitz goes back just far enough to give readers the quintessential story of a classic failed turnaround. At the end of the day, Palm’s failure is less a story of poor execution and more a story of tough-as-nails competitors like $RIMM and $AAPL.

Palm in the past few months has done many of the things it promised. It expanded from one phone, the Pre, to a second, lower-cost model, the Pixi. After launching service on Sprint (S), it added Verizon Wireless (VZ) as a second carrier and unveiled new versions of the existing phones, the Pre Plus and the Pixi Plus. After a slow start, it now has a steadily expanding number of applications in its equivalent of the Apple App Store. It has added carriers outside the U.S. And it has shelled out big bucks for a splashy advertising campaign.

There’s just one problem: No one is buying the phones.

There are a few questions that weren’t asked or answered in the story that I believe would be of great interest to all investors. These include:

Why did the sell-side research cadre get behind the company so early? Virtually every major firm was cheering Palm on from the beginning of its latest turnaround – were their buy ratings based on a desire to root for the underdog?
How did the tech guys get it so wrong? The Pre and Pixi caught on with the gadget guys, so why not the people?

Can we extrapolate Palm’s dissatisfaction with Verizon’s marketing assistance and figure out just how make-or-break the involvement of a carrier is in terms of tech product launches?

The smartphone market was Palm’s to lose 5 years ago…and they certainly lost it.

Source:

Can Anyone Rescue Palm from its Death Spiral (Barron’s)

Joshua M. Brown

Joshua M Brown is a New York City-based financial advisor and stockbroker. He is also the author of The Reformed Broker blog and his work has been featured by virtually every major financial publication. None of the opinions ...
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The Dark Lord

Aloha,

I am a techie and I call my self a total phone prostitute!

When they announced the Palm Pre, I was so excited I could not see straight. I liked what I saw about the OS and what they planned on doing. Then it came out and I bought it. Well, I was not so happy anymore!

1. I think the phone feels cheap and the slider is too loose.
2. the person who designed the keyboard must have super small hands and likes flat keys. Doesn’t help when you have big hands. I almost got cramps when I typed on it. It slows you down, any onscreen keyboard is ten times faster.
3. The pixi is competing with Blackberry and those type of phones. These people like Blackberry’s for a reason. They do not want a pixi!
4. Palm didn’t watch the market trend, instead of hitting the new market with a new OS and a super fast processor and tons of memory, a big screen (something like 4.0 inches), they went back to the small, cheap feeling devices and that market is saturated! (That’s what they are feeling)
5. They brought this out at such a great time. Man if they would have hit this with the config I mentioned, this would have taken off like a rocket! I would still have one for sure. I love the OS. Now OS 1.4 is even better, but it is all so small and cramped and underpowered. Yes Palm, you saved at the wrong Place.

Let’s face it, The hardcore people who are still with Palm, they wouldn’t have cared spending $399 or even $499 for a great nice big strong device. They just want it and would get it. And let me tell you, if there would be such a device with such a great OS, anybody who needs a new phone, wants to upgrade or has too much money and is like me a prostitute would buy one.

Look what MS does with their new stuff. They put everything on a new big strong Kahuna device and it will succeed. Little, week, cheap feeling devices who lag in performance are not in the game anymore. Everybody is tired of those so-called iPhone killers that are slow have a laggy OS. This is the best example!

My suggestion to Palm, you are late now, but you better take this beautiful WebOS and put it on real Strong and big devices. Stop producing more Palm pre’s. What is up with the Pre Plus. You got to be shitting me!

Anyway, those are my seven cents why they don’t sell so many devices. I am not a Sprint customer, but I have many friends and that is not the reason why they don’t sell. They won’t sell much more because of Verizon. Wait, maybe, same phone on a much more expensive network, yeah, that’s what I want, REALLY!!!!!

TDL