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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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How much longer can Palm survive?
By iluvdeal on 2/26/2010 8:25:39 PM , Rating: 2
It was a mistake from the start to limit the Pre to a carrier, Sprint, whose business prospects were remarkably similar to Palm as both were and still are market laggards looking to gain market share. If Palm wanted to make a splash with the Pre in their debut, they should have included Verizon from the start.

I'd say it's already too late for Palm, the Pre was their gamble and it didn't pay off. I'm seeing a slow decline from their current stock price of $6.xx back to under $1. The question now is will any company buy out Palm? I hear Dell mentioned as a potential suitor frequently. I don't see that happening as why would you want to battle software giants like Apple's iPhone, Google's Android, or Microsoft's Windows Mobile with your own proprietary OS? Let those guys put all the money and resources into developing the OS. If you want to sell a computer, do you program your own OS? Phones are no different. Just license Android or Windows Mobile OS, get access to all their apps, and focus on marketing your own phone.

Palm had a great run, the Pre was a valiant last hurrah, but their time has passed. If you work for Palm, starting sending out those resumes now rather than later. If you were one of those Apples engineers Palm coaxed to switch over, I hope you didn't burn any bridges back in Cupertino. :)

By k20boy on 2/26/2010 8:55:57 PM , Rating: 2
I think this is ridiculously overstated. Palm makes a solid product and one of the biggest issues is marketing. I think with Verizon's new focus on the Pre Plus, we will begin to see Palm's unit shipment increase significantly. Then, an ATT launch will allow it to have access to some 200 million potential customers (ATT, Verizon, Sprint). I do agree that launching with Sprint was rough for them, but I also think that they couldn't ramp production to the levels that Verizon would have initially wanted. If they can launch a new device that is faster, with a larger screen (and maybe a touch keyboard) with Flash support, I think they are well positioned against any major rivals. Also, a company that would benefit tremendously by buying Palm is Nokia. They are the world market leader but Symbian needs a reboot and they need carrier contracts in the US. They could drive webOS to be a real threat to Apple, Android and RIM. Best wishes to webOS -the greatest mobile OS on the planet!

"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch

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