Blog Post

Can Pre Save Palm From Being Put Out to Pasture?

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

palmpreToday, after a nearly year-long delay, Palm (s PALM) announced WebOS, a brand-new web-centric mobile operating system, and the Palm Pre, its first WebOS-powered device. With this twin release of seemingly cutting edge products, Sunnyvale, Calif.-based Palm hopes to stage a comeback in the mobile business.

While most gadget gurus (and lots of readers who follow me on Twitter) seem to be quite taken with the newest shiniest object, thanks to Palm Chairman Jon Rubenstein’s magic, the power of a press release and the drama of a CES keynote, I remain highly skeptical of Palm’s chance to succeed with this new effort. I may be the only one who isn’t buying it.

Many seem to have skimmed over the fact that the Pre has features that are typical of any smartphone sold over the holidays. Sure, it looks better than some Microsoft Mobile devices, HTC’s Tilt or some of the Samsung devices, but it its feature set is no different than, say, a Nokia E71. As Michael Gartenberg points out, Pre’s feature set is the equivalent of table stakes in order to play in the smartphone business. That said, he likes what he sees:

The UI is smooth and works pretty seamlessly as they’ve showed. Palm’s always understood how to do a good mobile UI and it’s clear that they’ve applied everything they’ve learned over the years to this device and platform. The Synergy technology is very impressive.

So what? That doesn’t guarantee success. I don’t think Pre has done anything to move the needle forward, though its backers — including the affable Roger McNamee — are waxing eloquent about its potential. In a market where the iPhone sets the pace, Palm is woefully behind the curve.

“Our intention was never to build an iPhone killer but to build a killer Palm product,” Rubinstein, a former Apple executive who was brought in as the executive chairman of Palm to work miracles, told The New York Times. Actually, it’s more like a Palm killer!

The Pre, which will be available on the Sprint (s S) network, won’t be released until sometime in the first half of 2009 or, as CEO Ed Colligan told the reporters in Vegas, “as soon as possible.” Technically, June 30 is in the first half of 2009. From now till the time Pre launches is going to be a crucial time for Palm. Every single day will push the company deeper and deeper into the hole it’s dug.

Why? By announcing its product too early, Palm has turned up the hype cycle around its new product offering, and that means fewer sales for its existing products. Palm and its carrier partners were already having a tough time pushing Treos out the door, and now those carrier partners are going to be none too happy. With a new Palm device on the horizon, carriers have less of an incentive to push the company’s current devices, and that means a further decline in shipments.

Last month, Palm reported a net loss of $506.2 million for its second quarter of fiscal year 2009. Sales sank to $171 million, and its shipments decreased 13 percent. It had to go to McNamee’s Elevation Partners to get $100 million in funding to keep going.

For argument’s sake, lets assume the Pre does come out on time and starts selling like hotcakes. It still doesn’t necessarily mean success. About 40 Android-powered devices are slotted to make their way to the market this year, and I am not sure if guys at Apple (s AAPL) are resting on their laurels. An OS upgrade, a new phone form factor is among things we should expect from Apple in 2009. What that means is that Palm would be playing catch up in the marketplace with a clear leader and dozens of desperate competitors. Palm will feel the financial squeeze, especially in 2009 when the economy remains in doldrums.

Now, lets talk about the Palm WebOS, its new operating system. From what you can read on the web, it seems to be one heck-of-an operating system, that is oozing with smarts that include live searching (of the entire phone and the Web), Unified address book (Facebook, Outlook and any other address books), Unified calendaring and dozens of other such features. They even have a Webkit-based browser just like an iPhone and Symbian- and Android-powered phones. It sounds so promising that I actually want to try it out – though, after being forewarned by my readers, becoming a Sprint customer is out of the question.

The question now is, will Palm be able to get a lot of developers to come and develop for the platform? Yes, we know they have a loyal community and millions of developers, but the momentum is with Apple and Google (s GOOG). As I pointed out earlier today, the iPod Touch is the secret weapon that makes the iPhone-platform attractive to the developers.

So, now you know where I stand. What do you think about Palm and its prospects?

94 Responses to “Can Pre Save Palm From Being Put Out to Pasture?”

  1. This, in nutshell, doesn’t compete with iPhone and Android. This competes with Nokia’s N97 (although N97 won’t run on Sprint). It features the same type of apps (mobile web apps) which act more like widgets. It is very complicated to write a complex mobile web app, much more complicated than writing native app (screen workflow, AJAX, javascript libraries etc.).

    However, this is great approach for simple widget like apps with few screens that any PHP developer will be able to develop and that actually is very good. However, remains to be seen how native functions will be integrated in the webOS. For example, if Palm doesn’t have map module ready for use within WebOs with a few lines of javascript code, then that would instantly kill majority of LBS initiatives. One of the main advantages on Android, for example, is full blown Google Maps library available for developers to use out of the box.

    That been said, iFart type of apps, which are extremely popular on iPhone will definitely be possible on Pre ;)

    This device will sell well on Sprint, will have its army of followers and a large pool of web developers ready to build web widgets spiced up with native libraries (e.g. camera access etc.). Again, very similar approach to Nokia where OEM (Nokia and Palm), builds majority of native apps and let’s army of web developers build web widgets that have access to native phone libraries (camera, vibrator, GPS etc.). it remains to be seen how many native libraries will be available to web developers with the first release of these devices.

  2. Om, you mentioned the “feature set” is like any other smartphone sold over the holidays. Please elaborate on what features you think this, or any device of this size in the smartphone market, should have (or, as is obvious, what the iPhone does so much better than the rest)? I think the interaction as I saw it on multiple videos (and I suggest everyone go to treocentral DOT com and look at Dieter Bohn’s hands-on) with all of the apps was excellent. The video viewing may still be a question on the device, but everything else seems to be spot-on. Besides PIM, music, video and a good web experience (oh, and it should make calls too!), what features do you expect a new “phone” should have. Remember, it is not a netbook. I am not a Palm fanboy or an iPhone/RIM fanboy either (waiting on iPhone V3 and/or RIM Niagara), but I was pretty impressed with what I saw yesterday. BTW – I am a long time Sprint customer but have always told everyone to pick the carrier that gives you the best coverage in your primary market. So don’t bash Sprint just because they did not work for you – ATT does not work well for me (and I remember you complaining a while back about lack of 3g service on the Jesus phone…LOL!)

  3. Jacob Varghese

    Dimensions: 59.57mm (W) x 100.53mm (L, closed) x 16.95mm (D)
    [2.35 inches (W) x 3.96 inches (L, closed) x 0.67 inches (D)]

    0.67 inches is very thick these days. Not very pocketable.

    The OS seems like a winner, but the device doesn’t appeal to me at all.

  4. One thing that comes to my mind right away is that have you ever thought of the actual people who have been using Treo? I use an iphone but dont agree with many points here.
    1. iphone though is a great touch phone its most often looked at as an extension of ipod/nano. I know many house wives who bought it just for fun. For a techie guy, this is not the best option. You surely would not want to listen to itunes, watch youtube or browse the net for fun on phone.
    2. I also used blackberry before buying iphone and other than being a good device for e-mails there was nothing more striking.
    3. Coming to Treo, its a combo. You have a touch screen phone with a qwerty key board. I think its best of both the worlds. Add to that, the power of integrating your calendar with GPS. Can you imagine what it could do? I think this would become a mandatory device for many of us very soon. The thought of identifying my location for meeting and informing the attendees if I end up being late automatically is mind blogging.

    I have not read many reviews of Om to judge his calibre but I can see that you are the only guy who is not excited with launch of Treo while all other tech/marketing experts are screaming on top of their voices that this is the best thing to happen to palm.

    For those, who are saying AAPL isn’t sleeping dont forget that the team behind new Treo has best veterans of Aaple in it. They took almost two years to come out with this product. I am sure they are smart enough to know that Aaple wouldn’t be sleeping and I dont think they would either…

  5. “…Pre really exciting. Jury’s out on whether it will be a game-changer, but it’s def a Palm-changer.” – Ryan Block

    I would add that without a well defined social object for the entire, non geek, community to rally around ( iTunes songs ) the Pre won’t succeed the way Palm and its investors hope. That doesn’t mean they can’t develop a social object, but until they do: “meh” :/

  6. WebOs is an interesting concept .I believe a device agnostic webos has more potential.It can be done if a web app framework is built on top of the operating system. One such attempt is done by us at Mobisy, Bangalore. We have built a web app framework to create mesh-ups between Mobile native apis and web apps called as Mobitop. Mobitop works on top of existing mobile operating systems like Symbian Windows Mobile and iPhone.

  7. as of now it seems to be a good iPhone competitor but as rightly said “Apple was also not sleeping all these months”. What I personally believe is that now any new change to iPhone OS and hardware will again put iPhone 5 years ahead of its competition.

  8. “Many seem to have skimmed over the fact that the Pre has features that are typical of any smartphone sold over the holidays.”

    The iPhone had (and still has) a feature set that’s worse than almost all of its competitors, and that doesn’t seem to have damaged its chances. Feature sets are only part of the story: usability is actually more important.

  9. I think that you are overestimating the hardware features and underestimating the importance of a useful UI. Just look at comments when the iPhone was released. There was a bunch of criticisms about the hardware features, but at the end, the convenience of its UI was the key to the massive acceptance. Even my wife, who is rarely interested in any gadget and has no idea about Apple or Steve Jobs, was impressed by it.

    I think that now days, when most people has half of their lives on line (email, chat, skype, social networks, youtube) betting on tight integration with internet is a very smart move. And what I’ve seen so far is far from what is available in other devices.

    I’ve been looking for an smart phone and if this device becomes available unlocked, I will seriously consider it just for the nice integration with internet.

  10. I’d like to second Mike Randal’s observation about a low-level graphics library and GL support. It will be interesting to see how they address this – if at all.

  11. I like the concept – although it’s hard to say without working with the system. The idea of JS hardware abstraction is quite exciting. Learning curve and ease of deployment would be huge pluses. Done correctly, it could seriously be cool to work with.

    It looks more polished than Android – and iPhone still can’t even cut/paste or multitask. Count one Android developer who will be trying the SDK – and most likely developing at least a couple titles with it.

  12. ol' yeller

    sprint is desperate and will market this device hard because they don’t have a franchise device right now. at&t=iphone, verizon=bb bold, t-mobile=g1, sprint=DAN HESSE (remember Terabeam anyone?)??!?! who does that guy think he is featuring himself walking across the cutesy downtown kansas city bridge near the plaza? he’s not dave from wendy’s, he’s a freaking telecom exec that nobody recognizes and he’s done a horrific job (ok, he’s only had a year so we’ll cut him a little slack) with a company that needs a top to bottom purge of talent and probably a hq move that he’s busy re-reversing back to overland park. hard to stay on top of what becomes more and more a technology and style business when you’re based in kansas and hiring from that region.

    palm will follow-up with gsm devices within 3-6 months.

    have to say the device looks better than i thought it would.

    hmmm… will palm survive alone? i’ll say no. they get bought for what? $200M?

  13. Hi Om,

    I think you’re being overly pessimistic. This phone has a lot of features which have been missing from the iPhone for a while now. While it remains to be seen how their dev environment works, Palm has always been pretty good with courting developers.

    You are not counting the fact that Palm, Inc. is full of executives and developers who are from Apple and RIM. They have a huge incentive to knock this out of the park.

    By the way, I live in San Jose and have had Sprint here since 1999. No coverage problems whatsoever. In fact, it seems just as good as AT&T (which tends to drop calls.) Also, customer service is hit or miss but when you find a “hit” they really go out of their way for you! I have had some of the most amazing customer service reps at Sprint. You just have to bounce around a few of the stupid ones before you get to them.

    Sprint is not perfect, but then again, I pay $60/month total for two Palm Centros, 1000 min shared, 500 txts/month/phone, unlimited data+tethering. I pay about half what most pay for 1 iPhone for 2 Centros, and split the cost with my boyfriend (who uses the other Centro.)

    Ask yourself this: what could Palm have done right in your opinion? I know you were bearish on their prospects for survival, and frankly they hit it out of the park with this phone (at least with the demo.) But you’re still negative. I don’t get it.


  14. I’m a Mac and iPhone application developer and I’m telling you guys right now: I’ll be in line to get a Pre the day it comes out. I’ll be signing up for Sprint, getting a second line (iPhone is the main line) and will be developing applications for it ASAP. As soon as the SDK comes out, I’m on it. And I bet a ton of people I know will be doing the same thing.


    Ease of entry into the new segment.

    The entire OS is basically one big, suped-up, WebKit rendering block running XML & CSS widgets as applications. WebKit is the best open source rendering engine out there right now, and it’s just going to get faster and better so running locally-accessible code within it (a Pre app) will be very fast. VERY FAST. Accessing internal phone functions and native core functionality will be as simple as a custom Javascript object setup to pass messages back to the runtime environment. This is exactly how Cocoa + Javascript talk to each other on the Mac and iPhone and it works incredibly well.

    The ease of entry comes at a price, however, and that price is game programming difficulty. 3D games for the iPhone are written using native OpenGL calls straight to the GPU, so unless Palm has some crazy tricks up its sleeve (like JIT compilation of Javascript for native processing) it’s going to get hairy writing games for the Pre in just Javascript. It can be done, and many of the “casual” games currently available for the iPhone could be ported to the Pre using Javascript, but the advanced 3D games won’t have a chance. Is that a deal-breaker? Who knows. Probably not.

    Om, your analysis is very good and I think withholding final judgment is smart at this stage, especially as it relates to Palm’s future.

    As a Mac and iPhone aficionado/developer, I’m going to stick my neck on the limb and say that this is a huge deal. The Palm Pre doesn’t have the specs of a highend Nokia smartphone, or perhaps the latest and greatest from HTC, but with Palm and Sprint working together, I think they have the best shot out of everyone vying for Apple’s throne.

  15. @Pat Sprint has a terrible reputation for customer service here in the west coast, but I have not personally been a customer. BTW Traverse City has some great wineries for Alsatian wine – and I say this from California.

    I agree Palm must get the Pre out ASAP – each day is sales lost but I’m sure the issue is the extensive testing carriers demand.

    I like the design, although I would prefer a slider keyboard on the wide side of the phone, but as a BB user I’m used to the narrow keys.

    The reality is that just one demo doesn’t make a product successful – we all need to get our hands on it and try it out. Pricing would help too.

  16. The API is HTML, CSS, and JavaScript. HTML5 storage. Multiple apps running with a JSON message bus. This thing is going to awesome for making mashup type apps.

    This is the first “cloud” phone. I would have thought Om would have liked that.

  17. Yuvamani

    Om : Why such gloom ?

    The WebOS is the best thing to happen to Palm in years and here are some counter points (to the rather excellent arguments you have made)

    1) The other palm products are windows mobile powered treos for enterprise and centros for the just entering smart phone crowd – Both these segments are not going to buy a Pre right now. The hope is eventually they will. So cannibalisation is not really an issue

    2) Sprint will market the hell out of this phone. Strong marketing caused a samsung instinct to ratchet up good sales inspite of being a crappy device … Sprint is a decent network for some people and is in need of a good device to prevent people leaving. The Pre is just that device…

    3) The os is amazing and revolutionary especially the app architecture – The UI alone seems way more polished than android … The device is better than the G1 .. Sure Android powered devices next year will give Pre’s headaches.. But the device and the OS can compete …

    4) By taking a rdically different approach to apps (HTML/CSS/JS + Mojo) Palm has made writing apps more accessible. Expect a lot of web2.0 apps almost immediately

    5) Finally a phone which can challenge iPhone aesthetically !

    6) A well integrated IM is missing from the iPhone among other features – This device can compete with the iPhone in some segments …

    Palm may or may not survive financially and in that case expect them to be acquisition bait for all those who have been trying to create iPhone killers and failing – I am looking at you Nokia …

    Palm has the technical chops to survive – The problem is the current recession makes their financial survival hard. That said considering the mediocrity around them and the long term strategic importance of the smartphone space I hope the webos is still around ! The alternatives are too hard to bear and Apple will walk away with this market uncontested …

    • @Yuvamani

      Good points – I agree they have done the good job of the WebOS and lets see if this is going to be enough.

      #1. cannibalization is an issue – why would you want to buy a lesser smart phone when a new, shiny one is going to come.

      on your point #2 — lets see how that goes. Sprint will market a lot and then what? Remember Verizon marketing the blackberry scream.

      #3, It can compete for sure, but the company doesn’t have the deep pockets for prolonged fight. We shall see if they will. I think there is a lot of emotional attachment with this company and the fact is that everyone loves a phone that is much like any other phone tells me that people want it to win. So they got that going for them,

      On point #5, lets just say you and I have different measure of aesthetics.

  18. Om, you’re right when you say Pre alone won’t be able to turn around Palm’s fortunes. But I think you’re being too hard on them in areas where they’ve done a capable job, and not hard enough on areas they ought to improve on.

    Palm Pre’s features may be on par with the Nokia E71 (and therefore table stakes), but so what? Damned if they did, damned if they didn’t? They’ve shown themselves capable of building a phone that can compete seriously on features and user experience. Even the Centro wasn’t a badly designed smartphone per se.

    But Palm probably won’t see a pickup in sales because i.) they haven’t been able to articulate a vision for the future, ii.) they don’t have a firm set of targeted product lines with reasonably predictable release cycles iii.) from developers’ perspective, Palm aren’t committed to a platform – their more recent Treos ran WinMobile, the Centro ran PalmOS, and now Pre runs WebOS. I have contrasted Nokia’s prowess on these counts with Samsung’s in an August 2008 article (

    It’s impossible for them to build hype around a product (unlike, say, Apple or Nokia) because no one (buyers, carriers, developers) have any idea what Palm is going to throw at them, why and when (or at all).

    Palm is looking to every new release to save their sagging fortunes. That isn’t a healthy sign at all. That’s evidence enough that they aren’t looking long-term. Heck, they’re just looking to ride out the next quarter and then hope for the best.

  19. Very good points om,especially about the relear date. But I think he iphone shows how far a great ui can take you in the still-young smartphone market. Palm doesn’t have the itunes ecosystem to leverage but the pre is a good step for a company that’s on life support.

  20. Excellent points, Om. While the new WebOS is certainly slick, and has some killer features around connectivity, I don’t think it’s enough to really save the company. The pre, imo, is just the black, egg-shaped nail in the coffin. As you mentioned, it doesn’t have any features that aren’t available across the majority of smartphones already on the market – much less those that will likely to be available by the time the pre hits shelves.

    Also, as you mentioned, the time frame for launch is….well, even today, it’s delayed, much less if it doesn’t come out till June. Add to that the lack of announced price (usually not a good sign), and the fact that Palm went with Sprint, the smallest of the four major carriers, and also the one struggling to make ends meet, and the pre has the odds stacked heavily against it.

    Obviously, I don’t know full financial details of Palm’s business, but if the Centro, which is now available across 3 of the 4 major carriers in the U.S., isn’t enough to save the company, launching a single phone, up to 6 months from now, on the smallest (and shrinking) of the 4 major carriers is surely not a great way to turn a company around.

    With phones such as the N97 coming out, and the iPhone due for an update, and Nokia’s budget-priced E63, not to mention the countless other qwerty smartphones coming across the carriers soon, I just can’t see how the pre is going to do much damage. Even you were already warned by your readers not to get in bed with Sprint (you have wise readers, btw, I’ve been there, done that, it’s ugly.)

    It’s kinda interesting that two major companies have tied this little black egg around their necks for 2009. The only thing more perfect is if Motorola had built the hardware or something.

  21. ryclarkeus

    Om, please give Palm the benefit of the doubt. Historically I think Palm is sort of going through what Apple did after Steve Jobs returned. A slow resurgence of Palm is on the way and I can appreciate that from a consumer point of view, essentially it will drive further innovation in a very competitive industry. Microsoft,RIMM your move. I would suggest you hold out on the predictions for the moment remember Hulu?

    • @ryclarkeus

      Of course I give them the benefit of the doubt, and if I am wrong, then I am wrong. Yes, Hulu prediction I remember – and I reversed my opinion. Lets see what Palm does now. As I said: not buying the press release, keynote and talk. They need to put the devices on the shelves.

    • @omisianidoit like all those geniuses who did hands on research and yes when it comes out i will do the hands on research. i just hope that you had the balls to use your real name if you were going to call me an idiot.

  22. You West-coast & big-City guys always dis Sprint, but here in Michigan it is the best (& cheapest) game in town. Good data for 5 years, great data for 3 years, 3G in most cities (not just Detroit!). Compare Verizon & AT&T which just barely introduced EVDO or EDGE or 3G in the last few months. And nothing at all to/from the beautiful north (e.g. Traverse City) where I spend summer weekends. It’s all about the network!! My Treo is getting long, long in the tooth, even though it is still the smartest interface around. The Pre ought to be the next great thing for me.

    • @Pat

      I am sure you are right about Sprint in Michigan. My family is there and they are happy but of course on the coasts they find it hard to use the service. Good luck with The Pre when it comes and come back and share the experience. Of course one must not forget that they are going after the smartphone buyers – and many do live in cities where they have terrible coverage.