Friday, September 3, 2010


Will the Pre be Palm’s Tonic?

Articles Written by: Darren Humphries on Friday, May 1, 2009 9:13pm

Palm PreI got thinking about the Palm Pre the other day and started wondering if it will be enough to save Palm.

First let me say that I think the Pre is great and is certainly going to be a successful product on its own but I would think it would have to be a smashing success to keep a whole company afloat. Yes, Palm still has the Treo Pro and Centro but those have not been anywhere near hot enough to get Palm out of its financial hole despite the number of units they have sold.

The argument of whether the Pre is going to be better than the iPhone, Blackberry, Windows Phone or Nokia is not the question here. There is no doubt that many will prefer the Pre and as such will buy one. But the Pre would need to be a runaway commercial success and I don’t think that it will.

Most of the buzz for the Pre has been coming from people that know about mobile phones. They can see that much of what Palm has done has been a very nice evolutionary step for smartphones, especially for social networking smartphones. They understand how different those things are from current offerings and are able to decide whether they will buy one or not. Still, many of these mobile enthusiasts will just take a wait-and-see approach because they already have a smartphone that works just fine.

So, who will buy the Pre? Will it convert the faithful from the iPhone? Will it erode Windows Phone sales? Is the Blackberry is danger of losing some of its momentum? Or will it draw in an all new crowd of feature phone users that are ready to upgrade to the big time?

All of the above platforms are going to have some defectors, but again, Pre needs to be a very big success to keep Palm alive. Let’s take a look at each of the above.

First, iPhone: I highly doubt we are going to see a lot of people dropping their iPhones for the Pre. The iPhone will do most of what the Pre will do and the iPhone has some kind of Voodoo hold on its user’s minds. Most are white-knuckling their iPhones and will not let go for anything. Plus, with 3.0 coming out they have more functionality to play with. I just don’t think there will be a lot of people walking out of the iPhone camp.

Windows Mobile users: I can see Pre actually stealing a lot of the Windows Phone users. WM users tend to be less emotionally tied to the OS than iPhone users; it’s more about functionality. If the Pre can do everything WM can then it is not a hard decision. Unfortunately for the Palm they are really targeting consumers and not business users with the Pre. There are bound to be a lot of WM users that will consider the Pre to be only for social networking despite this not being the case. Plus, WM come in MANY different shapes and sizes while the Pre is only coming out in one form (unless the Palm Eos is real).

Blackberry: Nope. I just don’t see this affecting Blackberry sales much at all. Blackberry phones are like cockroaches (is it possible to mean that in a good way?), they can survive anything!

Feature and regular cellphone users: Sure, there will be a good number that decide to make the move up and get a Pre but I still doubt the numbers are going to be significant enough. Many just want their phone to be phones and don’t want the added expense of a data plan.

The bottom line is that the Pre has a chance of keeping Palm alive but I think it is a pretty slim one. It’s going to be a fantastic phone but I doubt it is going to be enough for Palm’s ultimate survival. If Palm was to follow up the Pre with a number of new form factors they would potentially be able to create enough momentum to make it through but that takes money and erodes the profitability of the Pre itself.

Honestly, I hope I am wrong. I was a Palm user all the way back to the III and used to write a guide to sales software for Palm. I would love to see them survive and bring out more products like the Pre. I just can’t help but think that they will end up being bought out by someone else. That isn’t all bad as long as they can remain intact as a group in order to continue to advance the platform, but only time will tell if that future is autonomous for Palm.

Comments (4)
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Comments

4 Responses to “Will the Pre be Palm’s Tonic?”

  1. Mike Temporale on May 2nd, 2009 10:54 pm
    Mike Temporale

    Can the Pre save Palm? I don’t know. I think it’s the most hype and buzz the company has ever seen. It certainly looks promising. However, until the reviews start coming in, it’s really hard to say if it will cut the mustard – so to speak.

    If the Pre is a success or not, I don’t think it’s going to be the end of Palm. Back in late December, Palm secured $100 million in funding from some company by the name of Elevation Partners. ( http://bit.ly/19Ardu ) The timing on this was announcement was horrible and most news sites didn’t think much of it. However, I think they saw the potential that the Pre has and other designs that Palm has on the table to float that much cash into the company. I don’t think Palm can blow through $100 million on this phone alone. That cash should last them a while. At least I hope it does – for Elevation’s sake.

  2. Darren Humphries on May 3rd, 2009 1:54 pm
    Darren Humphries

    I am truly cheering Palm on. It would be a huge shame if the company that pushed mobile tech to the forefront was to no make it. Truthfully there are many forms Palm could take it keep going, all I meant with the above article was this they may not be what they are today.

    Mike, I understand what you are saying but in their last quarter Palm burned $92million in cash. This new $100, if it isn’t gone yet it will be. Plus, they are going to need to spend a fair bit of money in for the Pre’s launch. They lost a total of $94 million last quarter which just gets added to all the rest of what they owe. In order to turn around they need to be not only profitable but will have to figure out how to start paying down their massive debts. Either that or have enough positive momentum and a bright enough future that debtors are willing to convert debt to stock.

    Anyway, lets hope they can figure out how to make it.

  3. Mike Temporale on May 4th, 2009 8:28 am
    Mike Temporale

    WHAT!? I didn’t realize their burn rate was so high. Palm, it’s time to start losing some of the extra baggage or you won’t make it to the launch of the Pre!

  4. brettq on May 13th, 2009 12:41 am
    Brett Quam

    Nice break down, Darren.

    iPhone: I do not think iPhone users that use the device for media/games/apps will be leaving. They finally have money invested in more than just the phone and in this economy, they do not want to re-buy apps that may or may not be available for a while on webOS.

    WinMo: I really see Palm stealing WinMo users (like me). It is easier to develop for webOS and I think since the Pre has a hardware keyboard and can multitask, it is going to be stealing quite a few WinMo people…especially Sprint users.

    Blackberry: Ugh…yeah. RIM puts something in the water that just makes people crazy over them. I have owned the Bold twice, and it never lasted more than 3-4 days before going back. I do not get it, but to each his own.

    Feature/cell phones: If the price is right, I think this is going to be another smartphone gateway device like the Centro and the iPhone.

    I have played with the emulator and I can tell you that the OS is the best mobile OS I have ever seen that can multitask. I think Sprint will give demo units to their business contracts to test out to see if they will work in their company. Better EAS support than the iPhone and sexier than any WinMo device I have seen could win over quite a few execs.

    Gaming is the big unknown right now, but isn’t it so nice of Apple to make those non-iPhone things that still can play all of the iPhone apps called the iPod Touch!

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