Palm shares were hammered Thursday after the company lowered its 2010 estimate and admitted that its Pre and Pixi smartphones were not selling well. That's been an anecdotal certainty in a wireless world dominated by the iPhone, Blackberries and a raft of new Android handsets.
Shares in the company closed down nearly 20 percent after it released a pre-open statement revealing that revenue for the fiscal year would be "well below" the $1.6 billion to $1.8 billion it had forecast, and that poor adoption of its new smartphones were to blame.
"... driving broad consumer adoption of Palm products is taking longer than we anticipated," said Chairman and CEO Jon Rubinstein said in a posting Thursday. "Our carrier partners remain committed, and we are working closely with them to increase awareness and drive sales of our differentiated Palm products."
It's hard to imagine higher "awareness" of the Pre, even in a glutted smartphone market. All the tech heavyweights reviewed it, the vast majority if not all favorably. Our own Steven Levy wrote of the new smartphone: "Multitasking Palm Pre Brims With Power, Potential," while giving it the same 8/10 rating he also gave the iPhone 3 GS and Google's Nexus One. Palm also mounted a huge TV campaign last year that got a lot of attention, though perhaps not of the best kind since it was widely referred to "creepy."
Some indication that all was not well in Palm-land came as early as last November, when Amazon cut the Pre price to $80 — unsubsidized list is $500 — and the Pixi to $25. Meanwhile the iPhone continues to increase market share and handsets powered by Google's open source Android handsets are multiplying like rabbits, while the Pre with its nifty interface, ability to multitask, run apps in the background and even sync (for now) with Apple's iTunes still can't get no respect.
Palm's expectations were high, and so far matched only by the company's bravado. Before the release of the first iPhone in 2007 former CEO Ed Colligan told reporters: "I have great respect for Apple, but it won't be easy to create a good smartphone that will functions on networks worldwide. Nokia, Motorola and Samsung have worked on this for for 25 years and have only partially succeeded today. Our Palm Treo already has 90 percent of Apple's iPhone features at a much lower price.... "
Earlier this year Rubenstein famously said during an interview at the All Things Digital conference that "We don’t pay that much attention to Apple" and that: "I don't have an iPhone. Actually, I've never used one." Fine for a customer, ridiculous for the top guy speaking of the Goliath that is his main competitor. To say nothing of the fact that Rubenstein is a former Apple executive who led the iPod development team.
Not that anyone really believed him. But chances are he regrets having said it at all.
At the same conference, Elevation Partners co-founder Roger McNamee said he wished he could have put the fund's entire $1.9 billion into Palm — instead of just the $425 million they had sunk into the company.
"This is the thing that will define us," McNamee said.
Not that he probably meant that literally. But chances are he regrets having said it at all.
We're not in the pile-on business here, but the kind of swagger that Palm has exuded in the mobile phone space begs to be mocked — there have simply been too many statements of the "famous last words" variety emanating from Palm with little too back it up.
There was a time that Palm could do no wrong. It owned the PDA space when Apple was flatfooted with the Newton, and it pioneered the concept Apple has refined of opening up a mobile OS to third-party software developers as a means of increasing demand for hardware. They anticipated the death of the unconnected PDA market they had dominated with the rollout of the Treo, still a respectable player in the enterprise though vastly overshadowed by the Blackberry and Windows Mobile handsets.
Palm releases its fiscal third quarter results after the market close on March 18 and we wonder if some humility will leaven the optimism every company must endeavor to exude. While open for questions to financial press only you can be a fly on the wall by listening to an audio webcast at Palm's Investor Relations website (http://investor.palm.com).
We don't know what it will take to turn things around, but Palm holds such an iconic position in the history of mobile computing that its passing into oblivion — or, even worse, irrelevance — would be tragic. Remember, Palm: Apple was itself left for dead in 1997. Anything is possible.
So, please surprise us with something that will put us in the mind of that day when we laid our hands on a Palm V for the first time, and later the m515 and then the Tungsten. Otherwise, we'll be slaves to Apple's long march, to quixotic Android phones and to the Blackberries our corporate overlords insist we must carry.
See Also:
- Mausoleum: Palm’s Greatest Hits, Lowest Blows
- Palm Unveils Its Long-Awaited Smartphone, the Pre
- Palm Energizes Developers for the Pre Phone
- Palm Pre App Catalog Makes a Slow Start
- 6 Reasons Why the Palm Pre Is Special
- New WebOS Is Palm's Secret Sauce
- Palm Palm Pre Plus vs. Palm Pixi Plus
- Review: Palm Centro – The Treo's Little Bitchin' Brother
- Analyst: Palm Needs a Savior, and Treo Pro Won't Cut It
- Palm Unveils Smart Phone, the Pre (Wired.com Video)
