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Summary:

After listening in on yesterday’s Palm investor call, I came away feeling only half-satisfied. On the one hand, Palm says it’s poised to become cash-flow positive in two quarters. The company ended the last fiscal quarter of 2009 with $255.1 million in cash, even after going through […]

palm-preAfter listening in on yesterday’s Palm investor call, I came away feeling only half-satisfied. On the one hand, Palm says it’s poised to become cash-flow positive in two quarters. The company ended the last fiscal quarter of 2009 with $255.1 million in cash, even after going through $72.4 million. Sales of the Palm Pre really won’t impact finances until the next quarter, but according to CEO Jon Rubinstein, “Everything is going according to plan.” Palm expects gross margins for the Pre to approach 30 percent over time, which will surely help the bottom line.

On the other hand, the second piece of the puzzle isn’t yet in place. To continue driving demand for the Pre, the Application Catalog needs to be significantly expanded. It’s currently in a beta and holds a meager 30 applications. And there won’t be many more added until Palm gets the Mojo SDK to a wider audience.

That audience is set to expand soon. Rubinstein said that “hundreds to thousands of developers” will gain access to the SDK in the next few weeks. Palm hopes that it will be open to all interested developers by the end of the summer, but admitted it’s still tweaking the toolset. In the meantime, Apple’s iPhone App Store is busting at the seams with some 50,000 titles.

But Palm is betting its future on the webOS platform, believing it will drive the company for the next 10 years and beyond. With a bet like that, it makes sense to proceed in the self-described “controlled and methodical fashion” to get the platform right the first time. Given the ever-growing competition in the smartphone market, there may not be a second chance.

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  1. First thing, you said there is no second chance in this market, agree, but PALM doesn’t need one.
    Buy a Pre , use it , then you know it.
    Your comment “It’s currently in a beta and holds a meager 30 applications” probably meant to belittle PALM.
    You have to understand that these meager 30 APPS are most important APPS and were downloaded a million times already. And then about 100 APPS are coming next weekend.

    Apart from that PALM was swift to release an upgrade to fix important battery issue. My Pre now lasts a 10 hour work day without charging ( with three email syncs , and browsing … )

    They are working at a pace that is faster than APPLE.

    1. Kevin C. Tofel gbp Friday, June 26, 2009

      gbp, I did buy a Pre at 7am EDT on launch day out of my own pocket. I love the device and the new UI paradigm shift that webOS brings. What makes the first 30 apps so important? From Palm’s perspective, they’re important because the devs of those apps offered much needed feedback on the SDK. From a end-user perspective, I have to use my iPhone for apps that are important to me. Subtle, but important difference and the reason I pointed out the 30 apps. There’s no intent to belittle Palm here; if I had meant to do that, I would have been clear to do so.

      As far as 100 apps coming next weekend, I’m not privy to that info. Nor was it said on the call. What was said is that “hundreds to thousands” of devs would have SDK access “in the next few weeks.” I can only go on the info I have.

      Regardless, I think we both agree that the App Catalog is imperative to Palm continuing their early success with the Pre, no?

      1. Kevin,
        Yes , I agree , the App Catalog is the catalyst in selling Pre , and eventually WebOS.

        But sorry you spoke too early ,

        Surprise Surprise

        PALM just released the SDK to few more folks.
        How can I say that ?
        I got invite for it ( and I don’t work for big names like PANDORA , EA , GameLoft … and such).

        You will see about 100 more apps in a month or so.

  2. Kevin,

    Good post, and I like the moves that Palm is making with Pre. I also liked the TV commercial that they put out. It is clear that they are trying to define a space that is orthogonal to iPhone.

    But the $64K question is: Is it the Blackerry disruptor (i.e., go after enterprises and SMBs that need a keyboard but want a platform type of device)? Is it the build one set of apps and have them run with nominal modifications in your Pre and on the web? Something else?

    My only point is that until they do this, the measuring stick is iPhone (and iPod touch), and the metrics are devices (40M), apps (50K) and dowloads (1B), and Apple is not sitting still so mind share matters big time.

    Palm needs to come out with their own positioning, IMHO, and push specific outcomes that they are uniquely enabling and then drive metrics and milestones around that.

    Otherwise, I fear that they will run out of momentum and money, when they have a (potentially) winning hand.

    For more fodder on the SDK/App Store topic, here is a post I wrote on same:

    iPhones, App Stores and Ecosystems
    http://bit.ly/Hre72

    Check it out if interested.

    Mark

  3. Everybody loves to play the app card right now b/c that is the story that apple is telling and that is what their marketing has been driving for the past handfull of months.

    The fact remains that the webOS is a fantastic OS that provides a rich experience and there is essentially an infinitely higher number of developers capable of web development then those who are objective C coders.

    Getting apps in the store is not going to be an issue. With apple’s funkyness with approving/denying certain apps like emulators Palm will welcome those folks in as well.

    The big difference right now is Games. Palm cannot match wits at all with the iPhone and wont be able to until they release an update to the sdk/api to expose the hardware/graphics layer. But once they do I mave to imagine they will expose OpenGL and all those iPhone games will probably be pretty easy to port over.

  4. Everybody loves to play the app card right now b/c that is the story that apple is telling and that is what their marketing has been driving for the past handfull of months.

    The fact remains that the webOS is a fantastic OS that provides a rich experience and there is essentially an infinitely higher number of developers capable of web development then those who are objective C coders.

    Getting apps in the store is not going to be an issue. With apple’s funkyness with approving/denying certain apps like emulators Palm will welcome those folks in as well.

    The big difference right now is Games. Palm cannot match wits at all with the iPhone and wont be able to until they release an update to the sdk/api to expose the hardware/graphics layer. But once they do I mave to imagine they will expose OpenGL and all those iPhone games will probably be pretty easy to port over.
    Oops…forgot to say great post! Looking forward to your next one.

  5. While the SDK in limited distribution can deliver a certain category of application, isn’t Palm in the same position as Apple prior to the release of the “real” SDK? As a developer on the iPhone side of the road, I would love to be looking at another platform. RIM is to difficult to develop for in the media space, Palm could be cool, and Android needs some work. If Android gets a decent SDK and development process to market faster than Palm, I say that Palm is toast.

    I was impressed with the Pre release, and find the product compelling, but a market requires active customers, and in 6 months we will see how that is working. Frankly, I would find a Palm tablet more interesting than an iPhone tablet in some ways, particularly with HTML 5 on the horizon.

  6. Palm Pre Applications Monday, June 29, 2009

    Any firm word on whether they’ll be licensing out WebOS? Would be interesting to dig around on the flip side and ask who might be interested in licensing it begin with.

    1. Palm was asked about licensing webOS on the conference call. They said it’s not a religous issue for them, but at this time they have no interest. It seems like their focus is on improving webOS and getting the SDK out the door. After that, we could see some renewed interest in licensing the mobile OS. We can rule out who *wouldn’t* license it from a standalone Palm: Apple, RIM, and Microsoft of course. Nokia could be an outside chance, but they’re working with Intel on Moblin as well as their own Maemo OS, plus they have their arms around S60 right now. Perhaps some tier 2 or 3 handset makers would be interested or maybe Dell could use webOS to enter the market. Sony is another long shot, but I’m only basing that on their use of PalmOS in the past.

  7. Where Did the Missing Palm Pre App Go? Thursday, July 2, 2009

    [...] Last week on GigaOm, I said that Palm only has half of the pieces to the business plan puzzle in place. Maturing the SDK, distributing it and then building the App Catalog from its current beta status are a must. But perhaps I’m trying too hard to compare Palm’s potential success with that of Apple and Research in Motion, both of which have been gobbling up chunks of market share. Rubinstein did say that he feels there’s room in the market for four or five major smartphone platforms. He doesn’t feel Palm needs to be number one to win. [...]

  8. Hi,
    I just set up a business account over the internet with Sprint and having the Palm Pre sent to me in two days. I know the phone has no video but can an app be made to allow the Pre to video or will the hardware keep that from working?
    Thanks,
    Ron

  9. What Happened in Mobile in Q2? Monday, July 20, 2009

    [...] Palm Pre launched in the second quarter and quickly became an iPhone competitor. Indeed, Palm is placing a lot of stock in its success. But while the new phone is promising, it’s unclear whether it will be enough [...]

  10. What Happened in Mobile in Q2? | Tech Daily Monday, July 20, 2009

    [...] Palm Pre launched in the second quarter and quickly became an iPhone competitor. Indeed, Palm is placing a lot of stock in its success. But while the new phone is promising, it’s unclear whether it will be enough [...]

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