The reduced revenue guidance for Palm's current business year, announced Thursday, is suggesting to industry observers that the company will either have to make major alterations to its business plan or find a buyer. The slower-than-expected consumer adoption of the company's products -- which pushed Palm's annual projections well below its earlier forecast of $1.6 billion to $1.8 billion -- was no big surprise to industry observers.
"Having an excellent product is not the guaranteed formula for attaining marketplace success," noted IDC Research Manager Francisco Jeronimo. "Palm has an excellent platform, the webOS, but the company's lack of a wider portfolio and the strong competition from Apple and Research In Motion has been impacting the business."
The smartphone maker needs to invest and invigorate its brand, Jeronimo observed. "The question is whether or not Palm has the money to do this," he said.
Losing The Value Proposition
Palm's webOS is "very gesture-centric" compared to rival offerings and thus may not appeal to the full range of smartphone buyers, noted Roberta Cozza, a principal analyst at Gartner Research. Moreover, other analysts pointed out that Palm has failed to educate resellers about the benefits that webOS devices offer consumers.
"Every time I go to a store in the U.K. and ask about the Palm Pre and what I can do with the device, salespeople struggle to explain," Jeronimo said. "A minute later, they are asking me" whether (I) have considered "the iPhone, or a Blackberry."
The Palm Pre's hardware, user interface, form factor, services and pricing offer nothing superior to what stronger smartphone brands such as Apple and RIM already offer, Jeronimo noted. However, if Palm's technology was backed by a well-known brand with global distribution channels, it would doubtlessly be doing far better, other analysts say.
"They need scale," and an "acquisition is the only way I can think of" for Palm to get it, said Gartner Research Vice President and Distinguished Analyst Ken Dulaney.
Potential buyers include Canada-based BlackBerry maker RIM, Dell and even Nokia, which currently has a big hole at the high end of its smartphone portfolio. Jeronimo noted that Palm could make a big difference for Nokia in North America, where Nokia's brand is weak and market share very low. "I would see Nokia buying Palm if its market capitalization declines significantly," Jeronimo said.
Creating Additional Value
Still, the length of time required for integrating Palm's technology into existing product lines may be too long to attract the interest of established smartphone makers. On the other hand, companies such as ZTE or Huawei could also be interested should they decide to become a major player in the smartphone market, Jeronimo observed. "These companies have money to develop the brand in other regions like Europe," he said.
Palm's other option is to stay the course while creating additional value for customers by launching a wider range of services, Jeronimo said. Additionally, the company needs to develop partnerships with key players outside the United States, where the Palm brand enjoyed a modicum of success last year.
"Europe could make the difference if they manage to find some support from local carriers willing to invest in the brand," Jeronimo explained. But European carriers will only be happy to support Palm "if they see a long-term relationship and a strong road map," he added.
Palm needs to have more devices with different form factors and different price points as well as strongly support carriers at the point of sale by implementing strong commission plans that reward sales personnel, Jeronimo observed. "Otherwise, an iPhone sale is a lot easier," he said.
Posted: 2010-03-01 @ 9:42am PT
Palm dumped all its pda users. It's not surprising that none of them are interested in Palm again.