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Summary:

Palm’s bet on webOS isn’t paying many dividends, according to a research note issued by Northeast Securities analyst Ashok Kumar this morning. Domestic sell-through checks point to a “substantial decline” in recent sales of the Pre, Kumar said, and slashing the price to $99 hasn’t helped […]

palm-prePalm’s bet on webOS isn’t paying many dividends, according to a research note issued by Northeast Securities analyst Ashok Kumar this morning. Domestic sell-through checks point to a “substantial decline” in recent sales of the Pre, Kumar said, and slashing the price to $99 hasn’t helped much. Nor is the upcoming launch of the Pixi likely to reverse the trend.

Those slowing sales are whittling away at the prospects for webOS, which Palm had positioned as a worthy competitor to the iPhone, Android and BlackBerry platforms. From the note:

“As a fading brand, carriers are likely to see better returns on their promotional and advertising dollars with other vendors…WebOS has negligible smartphone OS share, 0.2 percent per Gartner estimates, and is unlikely to attract any meaningful third-party application support. Palm has bet the farm on webOS and there is a real possibility that they may not achieve critical mass.”

The Pre failed to live up to expectations out of the gate — thanks largely to Sprint’s unwillingness to heavily market the gadget (GigaOM Pro, subscription req.) — and Palm’s next best hope for webOS appeared to be an upcoming launch with Verizon Wireless early next year. But as Verizon’s Droid initiative demonstrates, the Google OS has captured the attention of the nation’s largest carrier. If it overlooks the Pre in favor of the Droid, that could put one more nail in Palm’s coffin.

  1. I think Palm screwed up big time when they released the Pre exclusively with Sprint. I think a lot of Verizon subscribers gave this phone a second look, but in the end, a large percentage decided they would just wait until it was available on Verizon. Now the Droid has come out on Verizon and the Pre has lost all its luster… my 2 cents…

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    1. Pete – Do you think that was Palm’s choice? That they passed up Verizon?

      A handset vendor wants every carrier they can get, with preference to bigger, and those willing to offer marketing support.

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      1. No one forced Palm to sign an exclusivity agreement with Sprint for over 6 months…

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    2. I would have likely picked up the Pre if it had been with Verizon – but I won’t leave Verizon to join Sprint so….

      But at this point I am waiting to see how the Droid pans out and with the IPhone coming potentially to Verizon – even if the Pre came to Verizon now – I will wait and see what shakes out next year.

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  2. I believe the same…Pre hype died out quick and Droid has stepped in……its all downhill now for them…..

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    1. Is there really hype for Droid? It’s so heavily marketed to geeks who have already signed their soul away on contracts with other phones.

      I think people who read sites such as GigaOm.com have a tendency to put a lot of hype into whatever the latest thing is. I can’t see any of my less tech-savvy friends (read: the majority of the population) to want something called a Droid that looks like an 80’s VCR that wants to kill them. I can see these people wanting a nice, easy interface such as that on an iPhone or Palm Pre/Pixi.

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      1. Travis- you clearly haven’t read the reviews or seen the sales numbers on Droid. It’s too bad the power of the Droid intimidates you, but you can always jump on a sinking ship- i.e. Palm.

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  3. Shame – webOS has, or had, a lot of promise. I had a Pre for a month – I just did not like the hardware & phone part but I was impressed with webOS. I think they needed to get it out to more carriers after 90 days instead of six plus months because Android has now buried it.

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  4. What a bunch of BS… what is a “substantial decline”? Just recently, another analyst had a rosy assessment for Paln: http://notablecalls.blogspot.com/2009/11/palm-nasdaqpalm-encouraging-management.html. Point is whatever these “analysts” say is guesswork at best.

    I do own a Pre and yes, I’d like Palm to succeed. But this article is pure speculation and absolutely no insight.

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    1. Completely agree, Om’s crew is wearing some “GOOGLE ” goggles.
      Droid is just a hardware marvel, nothing more.
      And these guys are calling it the best phone.
      Common the Droid can’t do multitouch ? and that cheap keyboard ?

      A Questionable analyst this Ashok guy is

      http://digitaldaily.allthingsd.com/20091012/kumar-iphone-china/

      And I wonder how he knows the sales numbers.
      Extrapolating the sales numbers based on channel distribution and partner orders is pure speculation.

      Half of these idiots don’t know the depth of the Mobile business . The speculate the stock based on number crunching. I wonder what forecast he has for the Pixi ?

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      1. gbp – agree completely. analyst predictions RARELY come true. SWAGs at best.

        how about launching GSM versions of the Pre on AT&T and T-Mo? c’mon Palm…get your shizz together and put it out there on decent ntwks (vs. a crap one like Sprint).

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      2. You’re right that the Droid has its limitations — as any other handset does — but that (obvious) fact doesn’t change Palm’s increasingly dire situation. I’ve been as impressed with webOS as anyone, but the platform hasn’t gained much traction with developers or consumers. And while Verizon once seemed like it play play the role of Palm’s redeemer, that’s looking less likely in light of its big-budget Droid push.

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      3. PALM’s APP store has about 400 APPS and its only growing.
        In six months I would predict it to cross couple of thousands.
        While folks dance and sing about 100 thousand iPhone apps , I would say not all of them are productive or used daily.
        I wish someone does a survey of APPS usage.
        Regarding Droid, I haven’t used it, so can’t comment. But I knew folks who used it.
        They think the hardware of the DROID is best ever they have seen (includes the iPhone, RAZR and such). But software falls way beyond. No multitouch on browser ? Not elegant switching between apps … the list goes on.
        Pre will be selling on Verizon in two months. I am sure PALM will continue to make money.

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      4. Slim – get your facts straight brother (Sprint vs. AT&T network wise = NO CONTEST, Sprint vs. Verizon network wise = an underdog puttiing up a decent fight)..how short-sighted is this statement..

        “get your shizz together and put it out there on decent ntwks (vs. a crap one like Sprint)”

        When was the last time you carried a phone, from a different service provider, for a substantional period of time? If you craft your opinions based on someone else’s…are they really your own?

        Let me guess, you think Windows 7 is the best thing since sliced bread..? I can’t tell you it is, or it’s not, but I can tell you I wouldn’t base my opinion of it on feedback I got from you. Nor would I base it on the fact that I hated my Windows XP from years back. Things change.

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    2. It is a guess, but sales are critical. I would like Palm to succeed, but my feeling is that they are trapped between Apple and Google. RIM isn’t a pushover either. If they can find success in the market through a moderate amount of sales that may be sufficient. Palm’s advantage and perhaps saving grace is that they based their development path on web tools.

      Frankly, I wouldn’t put my money on them, but competition is good! Google has a lot going for it outside of personal devices per se. There is substantial interest in embedded systems such as kiosks and ATMs.

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    3. @ipot & gbp,

      I think you’re letting your Pre-love blind you. Certainly more than this site have given the Droid great reviews. In fact most will point out it’s flaws (largely fixable by an update) yet in the end give it a high recommend. Heck, even an iPhone site gave it a favorable review:

      http://www.theiphoneblog.com/2009/11/12/motorola-droid/

      As a former Palm Treo owner myself I too hope them the greatest success, but don’t discount Droid and the Android OS.

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      1. I neither have Pre-Love, nor was a PALM fan.
        We have seen companies that do both hardware-software came out with innovative products. APPLE, RIM , PALM and NOKIA belong in this club.
        While Google is good at most of the things they do , their core competency is search.
        Android will fall behind the above companies in terms of innovation. Why ? too many hardware vendors cooking too many flavors.

        I owned HTC Hero which has Browser multi touch in Version 1.5 , but the DROID is missing in Version 2.0. Why ? because one is made by HTC and the other is by Motorola.

        And strange thing , The Droid lets APP use multitouch.

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  5. what utter tosh, palm has done a great job with palm pre all things considered. america is not the only market, plenty of people around the world dont have an iphone or droid !!!!!

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  6. I would like to see WebOS be successful, but if it appears that it may not be, Palm could move to Android & put the WebOS UI on top of it. From the user’s perspective, it would function the same, but it would now have access to the thousands of apps in the Android Market.

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  7. Yeah right sire,
    Are you guys paid to write against PALM ?

    Check this one out.

    http://www.streetinsider.com/Analyst+Comments/Palm+%28PALM%29:+Encouraging+management+meeting%3B+Reiterate+Buy+-+Merrill+LynchBAM/5097286.html

    Droid is DOA , talk about iphone killer , huh,

    After APPLE , PALM has the talent to bring smart features to the phones. The question is do they have money.

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    1. Dude why don’t we wait till they announce the Q4 earnings in January. We will talk then.

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      1. Om,
        I will hold you come Jan 2010 :-)

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      2. Mark my words, Palm will beat expectations come January.

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      3. dRoid MACHINES are all look-alike clones supported by their common AndRoid OS. Their existance in human psyche is only during their come-out parties thrown by their carriers, and soon to be forgotten by the next dRoid-clone’s arrival. Look what happens to Moto’s dRoid when Sony’s dRoid arrives. And then one from HTC, then Samsung, LG, and on. They don’t have much distinguishable characteristics other than like a dark (when off) gigantic rectangular slab of glass, some with edgy corners, some roundish, and when held to one’s ears, it would seem someone holding a flat-screen TV to his/her ear. People soon will become bored with these dRoid-clones and will look for refreshing ideas in smartphones like iPhone, Pre, Pixi, or even a BB, if BB doesn’t launch dRoid like smartphones. And then AndRoid will become like WinMob OS which is slowly progressing to it’s natural death unless Win 7 does something to it like create a WinMob 7. In order to keep AndRoid going Google has to put a substantial effort into it’s Mobile business. Although Google, like Microsoft, is in software business, but their main focus is creating more powerful search engines to prowl unstructured data to feed more and more information to public and thereby generating oodles and oodles of greenbucks for them through online advertisements. So to generate and keeping alive mobile OS like AndRoid for the FREE use of other phone manufacturers is worth the effort is highly questionable, since the benefit they are seeking, generation of oodles through online ads. by letting people do their search, now wirelessly, will be an integral part of all mobile operating systems anyway in the forseeable future of the mobile world. So the seed of destruction of the dRoids is in public’s mindscape, just as when public start to see that they have seen enough of these clones.

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      4. Mr Malik –

        This initial prediction from your site, and the back-and-forth between you and the posters has degenerated into a PALM stock message boards. Of course we have more civil people here (no bad language here) – but the point is , analysis is missing, and you look desperate to be on the winning side.

        Its not the stock market – but you want to be with the market – innovation be damned.

        Thats not to say you are anti-innovation , but what you are saying is “Market wins, innovation be damned” .

        Hence Sir, I label you as being ANTI-GEEK.

        Vj

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  8. THIS IS SUCH CRAP!!!!!!!!!!!!!!!!!!

    Why does ANYONE pay attention to Ashok Kumar anymore? He’s been declaring Palm DEAD before it even launched! Look him up and you will see that he has ALWAYS been, for whatever reason, anti-Palm.

    Consider the source. Merrill-Lynch just put in their analysis for Palm, and it’s a good forecast.

    GigaOM, stop running pointless stories. Please.

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    1. Yes,
      And this guy even said iPhone is not selling well in china.
      He likes to research things that are not selling well.

      Merrill has better outlook on PALM, plus they got money ( 500 millions) to feed a thousand employees. Mr.Collins , I am not sure why you chose to write about this topic.

      http://blogs.barrons.com/techtraderdaily/2009/11/11/palm-merrill-repeats-buy-rating-finds-stock-compelling/?mod=yahoobarrons

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      1. Well apparently the iPhone isn’t selling well in China, so he is right. So he like to keep it real. To you it seems like he likes to research things that are not selling well. That is because they are not selling well :-)

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      2. This site is always looking for negative stuff on Palm. Like was posted, why didnt they run the story regarding the ML\BOA analyst? Also I think you guys are over hyping Android. To me its mostly for tech geeks, doesnt look as elegant or as simple compared to webOS.

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  9. [...] bleak outlooks continue with a research note from Northeast Securities. Its analyst Ashok Kumar dubs Palm a “fading brand” and says there’s “a real possibility that [WebOS] may not achieve critical mass.” What makes [...]

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  10. [...] Palm’s bet on webOS isn’t paying many dividends, according to a research note issued by Northeast Securities analyst Ashok Kumar this morning. …Read Original Story: Palm Pre Sales in “Substantial Decline”: Analyst – GigaOm (blog) [...]

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