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.
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.
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