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Palm on the block; users in a lurch?

Bloomberg News is reporting this morning that Palm will be putting itself up for sale, a move that would end its 18 years of existence as an independent manufacturer of smartphones and handheld organizers.

palm_logo.jpg

The Sunnyvale, Calif., company, once a dominant smartphone vendor, has had a few rough months.

Although it made money in its last quarter, which is more than a lot of other companies can say, it's lost market share. ComScore's February smartphone numbers showed it and Microsoft losing considerable ground, while Apple's iPhone barely dropped and Google's Android saw a big jump. Meanwhile, the stock of third-party programs available in Palm's App Catalog still trails far behind the selections available for the iPhone and Android, despite moves by Palm to open up app development.

This isn't the situation I thought Palm would be in when the company surprised Consumer Electronics Show attendees in January 2009 by unveiling the Pre and its webOS operating system. Both its slick hardware and its elegant, multi-tasking software owed nothing to Palm's prior, hapless attempts to build a modern smartphone.

Palm followed up by launching the Pre on Sprint to general acclaim (including from me) last summer. Last fall, it introduced the cheaper, even thinner Pixi. And over the winter, it shipped the Pre Plus and Pixi Plus for Verizon, which added memory and support for tethered use as a computer's wireless modem; AT&T, in turn, says it will sell versions of those phones "in the coming months."

The conventional-wisdom explanation for Palm's troubles focuses on that lack of third-party applications -- just over 2,100, compared with some 45,000 reported for Android and 185,000-plus for the iPhone. I'm not so sure about this explanation, though.

First, most people don't install that many apps -- just 20, according to the market-research firm Yankee Group. Second, if having the most software determined a platform's market viability, Apple's Mac OS would have perished long ago and Android would not be doing nearly as well as it is. Third, Palm has done a pretty good job at luring such name-brand developers as Yelp and Pandora, in some cases before they shipped Android versions of their software.

I think you also have to look at poor marketing by Palm and its carriers, combined with far greater attention devoted to Android as "the iPhone alternative."

Either way, today's news may fuel some uncertainty for recent Palm buyers. Or the people who suggested that they buy a Pre or a Pixi.

Yes, I'm talking about myself here. See, my wife recently upgraded from an aging Palm Centro to a Pixi, based in part on my suggestion. That was actually a fairly easy call to make: Sprint sells the Pixi for a lot less than its Android phones, and that smartphone offered -- by far -- the easiest migration for her data out of Palm Desktop.

So am I now expecting to be in hot water at home because of my advice? I'm thinking not -- precisely because of where my wife's data now lives. Palm's webOS relies almost completely on "cloud" storage, employing Google Calendar and Google Contacts to store your schedules and addresses. That's not true of memos, but a little copying and pasting sufficed to move them to the cloud-based Evernote application -- which, since it runs on just about every smartphone on the market, ensures there's no lock-in there either.

Our total exposure, should Palm vanish down a wormhole tomorrow, is the cost of the phone and about $1 spent on one game purchase. And even then, it will remain a far more capable Web/e-mail/contacts/calendar device than "feature phones" of the same cost.

A perceptive essay at Ars Technica made this point last month, though it phrased it as a backhanded compliment: By not locking in its customers' data with proprietary software, Palm made it too easy for them to go elsewhere.

That's a "mistake" I wish more companies would make.

So now what? If the Bloomberg story is true, Palm should retain considerable value for its patent holdings. To me, that makes the likeliest buyer HTC -- since Apple recently saw fit to file a patent-infringement lawsuit against the Taiwanese phone manufacturer, it could probably use a stock of pre-iPhone patents to throw against Apple in a countersuit. I don't think HTC would mind getting access to Palm's engineers and developers either.

So that's my read on the situation. If you've got a different conclusion -- or if you'd like to scold me for talking up the Pre and the Pixi before -- the comments are all yours.

By Rob Pegoraro  |  April 12, 2010; 10:24 AM ET
Categories:  Gadgets , Mobile  
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Comments

my assessment is Palm (which i use) was making the right moves and poised to move up dramatically but had the misfortune to start figuring things out just as Android showed up. In the "alternative to the entrenched powers" world no one has the mindshare of Google, and their truly innovative and often open sourced technology . Expectations are they'll do for phones what they did on the web (eg breakthru stuff like google maps).

Posted by: bogger | April 12, 2010 3:06 PM | Report abuse

Rob, I don't see you as being any more clairvoyant than any other tech reporter/writer, so I fail to see how your wife could blame you. Even if Palm does go the way of the Dodo bird, your wife's phone will still work, and it'll probably work through the end of it's contract. So I don't see anything lost there.

Verizon has done an absolutely horrible job of marketing the Palm. It seems as though they carry it, just to have it, but that's the end of the story.

Unfortunately, it may be one of those devices which had everything going for it, except the timing. Of course it'll be a shame if it goes away, but OTOH, if HTC picks it up maybe they'll be able to do what Palm (and Verizon) haven't done.

Posted by: henwin | April 12, 2010 4:39 PM | Report abuse

Henwin must not be married if he thinks a wife can't blame a husband irrationally.

(Or Henwin is a female, but then she'd understand why blame is expected, and probably would agree with Mrs. P.)

My wife went from a Centro to a Droid. Loves the Droid. LOVES IT. I'm not sure where I fit into her relationship pecking order vis-a-vis the Droid. This purchase coincided with migration of our personal email and calendars to Google Apps, which helped. I confess I didn't even look at the Palm products Verizon offered when I bought her the Droid...that's how disappointed I was in the Centro (and how well-advertised the Droid was...she demanded a Droid).

I'm stuck with WinMo for work...but have substantial Droid envy.

Palm was a pioneer...I had one of the first Pilots and loved it. But all good things must end. They jumped the shark some time ago and haven't been able to recover.

I agree with Bogger that Android is where the future is in smartphones.

Posted by: pjgeraghty | April 12, 2010 5:25 PM | Report abuse

I love my Palm Pre. Dollar-for-dollar, the best overall phone on the market with the best-valued plan on Sprint. I feel bad that most people don't know how good it can be or the easy availability of third-party extended batteries. I get around 2 days on a charge now and pay about 50% less than your typical iphone user for my plan. Verizon, if you so choose, has free tethering hotspot function for the Pre Plus with your laptop which would eliminate your home internet bill. The device is a tremendous overall value which the Palm, Verizon, and Sprint folks have failed to convey to end users. I hate to witness a superior product lose in a competitive market due to poor marketing strategy but I hope that a potential buyer will continue to allow their engineers the ability to produce great products, and find a successful marketing team to display those abilities to consumers.

Posted by: JoeSchmoKnows | April 12, 2010 6:33 PM | Report abuse

How can you suggest anything other than an iPhone when dealing with this category? Your wife is probably cursing you when she uses that clunky, plastic droid and everyone else has an iPhone. What you seem to not understand is that the iPhone is a computer that makes phone calls. Your complaint that Apple controls the content is not really valid. Anyone can develop for iPhone, they just have to go through Apple to get on the app store. The benefit is that the apps are tested to ensure they don't crash the phone, are virus free, and aren't loaded with bugs. I know this sounds like Apple cult talk but really, these copycat devices are not even in the same category as the iPhone. As a tech writer it seems you are clueless about a lot of things. Have fun on your pixi- how does iTunes sound on that? Oh yeah, I forgot there is no iTunes onpiesi or droid. Next thing you know you'll be recommending the new Microsoft kids phone. There's another great idea. Buttons on a phone?it's 2010. I'm sure the kids will be clamoring for this one.

Posted by: Rileymrtn | April 13, 2010 7:34 AM | Report abuse

I abandoned Palm a few years ago after sticking with them for almost a decade. It was a pain, but it was necessary because the Palm PDA just weren't getting it done. The annoying part is that. There might be only 2100 applications in the Palm store, but there were a lot more out there. There was also a pretty significant open source community. I regretted leaving all of those applications (many of which still exceed the Android counterparts) behind.

That said, it would be nice if someone built a Palm emulator...

Posted by: slar | April 13, 2010 8:40 AM | Report abuse

...The annoying part is that I had invested a lot in Palm applications over the years...

Posted by: slar | April 13, 2010 8:46 AM | Report abuse

The point is, PALM is a great company and has been a great company. Their problem is, they haven't been nimble. I'd love to see the WebOS survive. Why can't we have a robust marketplace for things like this? Why do the stories always get written so that it is one winner and one runner-up, and then one open-source option?

I think WebOS has a lot to offer. I'm hoping that a new corporate owner might be able to inject some excitement and life into their phones.

Dear Manufacturers: Make a 4G WebOS for Sprint and I will buy it!

Posted by: lepanto | April 13, 2010 10:11 AM | Report abuse

I've been following the Palm sale with some interest since I bought a Pre Plus two weeks ago, and quite like both the phone and the underlying operating system. But this has me concerned. This is the first time I've seen that my phone will vanish out of my pocket the moment Palm is sold. Or is it that Verizon thugs will beat me until I give it over? Cause I don't understand the concept of "Our total exposure, should Palm vanish down a wormhole tomorrow, is the cost of the phone and about $1 spent on one game purchase" unless one of these is the case.

The phones will still exist, and WebOS will still be supported by the buying company. Hell, any company buying Palm is doing so precisely to get their hands on WebOS. Hand wringing does not seem called for in this situation.

Posted by: thurdl01 | April 13, 2010 11:58 AM | Report abuse

@Rileymrtn: Your iPhone absolutism is not as persuasive as you think--certainly not when you express it as insultingly as you just did. (Would it be unfair to note that some iPhone users complain that they cannot make phone calls on the device, thanks to AT&T network issues?)

@slar: There is, in fact, a Palm OS emulator for the Pre and Pixi, MotionApps' Classic.

@thurdl01: The real risk is that people such as the gentleman who commented early this morning will say mean things about your taste in smartphones. That's a terrifying prospect, isn't it?

- RP

Posted by: robpegoraro | April 13, 2010 12:51 PM | Report abuse

I am looking forward finally to the release of the Pre Plus on AT&T. I always wanted a GSM phone and I have been with Palm since Palm III. From everything I have seen, webOS is great and I will get it irrespective of all the Palm buy-out rumors. The phone should still work and best would be if Palm can live through this and come up with more nice devices based on webOS.

Posted by: rtumkur | April 13, 2010 1:28 PM | Report abuse

Ad-mob mobile metrics actually don't support the Yankee Groups rather preposterous idea that only 22 apps are downloaded per phone. AdMob surveyed almost 1000 users of varying platforms (iPhone, iTouch, Android, webOS, etc.) and found that in just 1 month they downloaded between 8-12 apps for Android/iPhone OS crowd and fewer than 6 for the webOS users. That's just 1 month. I've had my iPhone for almost two years and have 55 apps installed. If webOS users had access to a larger catalog, I'm sure their numbers would blossom. That knocks down your first point. Your second point brings up MacOS, not germane to this discussion as that's a desktop OS fueled by zealous adherents, and Android. Androids popularity stems from it's open source model and $0.00, as in free, cost to handset manufacturers (much more attractive than paying for Windows Mobile licensing). It has nothing to do with apps when it comes to Android, and everything to do with free. This is also why you're seeing a boon of Android tablets. No one wants to pay licensing costs for Windows 7, unless said tablet is going to cost over $800.

Two things killed Palm - lack of an SDK on the day that thing dropped (it's the apps stupid) and a terrible ad campaign that feature a uni-sex red head and her legion of strangely synchronized Maoist followers.

Posted by: pedropolis | April 13, 2010 2:16 PM | Report abuse

First, the iPhone is not a "computer that makes phone calls", because a computer can run more than one application at a time. This is fixed in OS 4, but that's not out yet.

And, I just got two Palm Pre Pluses on Verizon for nothing out of pocket, due to new-every-two and their bogo offer. I have to say I wasn't even condsidering a Pre vs a Droid or HTC Incredible, but $0 changed my mind. I'm very happy with the phone, a lot more than I expected. The only issues are the GPS, which is flaky at best, and lack of a few calendar and task options that my BB Pearl had. But since the Pre has an active homebrew community, I've already tweaked most of the things I didn't like with patches.

I am not afraid if Palm goes under, because the phone will still work. It would be a shame if the OS updates stop, but I'm sure the homebrewers will be able to fill some of that in.

Posted by: john65001 | April 13, 2010 3:42 PM | Report abuse

I love my Pre! I don't understand why others don't either. Sure, there are glitches every now and then and things it can improve, but, the ability to multi-task by opening up to 4 programs at the same time is such a life saver. The video clips I shot are so clear, it's as if I am looking at live action. I hope the Pre wil stay around.

Posted by: LYang39204 | April 13, 2010 4:39 PM | Report abuse

I've been a Palmaholic since the early days 10+ years ago. It reminds me of the Psion 3 and 5 (from the UK in the 1990's) and Newton, all of which came out at about the same time. Great early entry products that weren't necessarily well executed and certainly not well marketed.

I have a Treo 700P and my wife has a Centro. I'd love to upgrade the Treo, as I find that it doesn't work all that well in the Metro. [Does anyone test the RF side of a phone: transmitter and receiver specs?] Verizon, my carrier, insists that I sign up for a data plan -- which I do NOT want -- in order to upgrade to a Pre or Pixi.

What's a mere PDA/phone (and not data) user to do?

Posted by: wd3q | April 13, 2010 5:07 PM | Report abuse

Too bad, I like the Palm Pre. As far as I can tell it does everything the iphone does except faster since Sprint has a better network. Sprint and Verizon didnt do a great job of marketing this phone.

Posted by: hcwarden | April 13, 2010 7:01 PM | Report abuse

Yeah, I would say that Palm's marketing was awful. Those TV advertisements with the pale-faced woman were really disconcerting, and they did very little to actually show the product.

Posted by: jkh1970 | April 13, 2010 10:34 PM | Report abuse

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