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Despite promising smart phones and a new contract with Verizon, Palm has continued to struggle this quarter. It did, however have some good news -- an update that will enabe video recording and Flash on the Palm Pre.  (Source: Palm via VentureBeat)
The veteran smart phone maker continues to struggle

Palm was on a sharp slide over the last couple years, thanks in part to the rising success of Research In Motion's Blackberry smartphones and the Apple iPhone.  That's a foreign position for the company, as it was on the forefront of the smartphone revolution, releasing one the Treo 180 back in 2002 (five years before the first iPhone).  As the PDA market vanished and was replaced with smartphones, Palm was beat by faster competitors in the race it helped launch.

Recently, though, Palm looked to turn things around with the release of the Palm Pre and Palm Pixi smartphones which are powered by its latest operating system, webOS.  It also scored a deal with Verizon, America's largest carrier.  Despite this big boost, it delivered some disappointing news this week; it forecasted a revenue of between $300M to $320M USD in its fiscal third quarter that ends this month.  That's well below the $424.7M USD average analysts estimated.

The weaker than expected revenue was a result of poorer than expected sales.  Palm is predicted to only move 750,000 smartphone units in the quarter, down from the average analyst estimate of 1 million units.  As a result of the bad news, Palm stock plunged over 24 percent in busy trading today and yesterday.

Part of Palm's problem is that Verizon hasn't aggressively marketed the Palm Pre and has been much more vocal about its Android phones.  Some think that Palm's poor performance may sink a prospective deal with America's number 2 carrier, AT&T, which announced earlier in the year than it would carry two Palm smartphones (likely the Pre and Pixi) in the first half of this year.

Palm CEO Jon Rubinstein moved quickly to reassure employees, sending a company wide letter stating that he feels the firm will soon turn the corner, thanks to the Verizon deal.  In the letter he details plans to send 200 "Brand Ambassadors" to Verizon stores nationwide in the U.S. to help push Palm's smartphones.  He also points out that Palm does have a cash stockpile of $500M USD, which it can use to survive during a few rocky quarters.

The company also reported some good news for its smartphone customers -- a new webOS update for the Palm Pre and Palm Pixi will air today.  The update, webOS 1.4, will be initially available from Sprint only, but expect Verizon to soon follow shortly.  The update is packed with goodies, from bug fixes, to video capture and editing.  Among its best additions, though, is the inclusion of an early build of Adobe's Flash 10.  Having Flash gives it access to the internet's wealth of Flash apps and games, a catalog rivaling even the Apple App store's.  And while some of the apps may not be well suited for Palm's screen resolution, they do enjoy the advantage of being largely free (ad revenue supported).

Despite the bad news, the overall picture is that Palm may be down, but it's by no means out of the smartphone race.



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RE: Out
By Yawgm0th on 2/26/2010 1:37:21 PM , Rating: 3
quote:
they're the only one that control both the OS and hardware
Um... What about RIM, the smartphone market leader? Granted, RIM is more open than Apple, but still controls both OS and hardware.

Anyway, the current Palm's are pretty good. Different people have different preferences. There is enough room in this market for five major players, IMO.


RE: Out
By adiposity on 2/26/2010 7:12:41 PM , Rating: 2
quote:
quote: they're the only one that control both the OS and hardware Um... What about RIM, the smartphone market leader? Granted, RIM is more open than Apple, but still controls both OS and hardware.


Am I missing something here? What about Palm (the topic of the article)?


RE: Out
By mcnabney on 2/27/2010 1:18:23 AM , Rating: 2
Their market share is too small to bother mentioning.

Choosing Sprint as an exclusive provider for the first ten months nailed their coffin shut. They needed to sell their devices on all four of the top wireless companies to generate the volume that would build their App store. They don't have the luxury (or market window) to grow like Apple.


RE: Out
By johnr81 on 2/28/2010 5:09:29 PM , Rating: 2
quote:
Choosing Sprint as an exclusive provider for the first ten months nailed their coffin shut

I have a Pre and like it, in fact I like it a lot more now after months of updates than when I first got it. Adding video and a flashing message light was really nice this time around (favorite update by far).

Palm may have limited their initial success by going with Sprint, but I don't believe that's going to lead to their demise. They've got a solid start and now when they move to other carriers like Verizon they have a nicer OS to offer. I also believe they just released, or are releasing a more powerful C++ webOS dev environment.

Now they can approach the other carriers like BlackBerry does and try to increase their market share. Unlike BlackBerry, webOS is actual based on linux, so it's not as proprietary to start with (as far as OS). They lower their predictions by 25% and their stock goes down 25%, big deal, that's the market correcting appropriately.


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