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  1.    #1  
    There is a perspective often attributed to 'wingnuts' that Palm performs mis-step after mis-step, that they have neglected their product line and are not competitive anymore. This article from The Street shows this view is not confined only to obsessive Palm watchers with no idea of how to run a business.

    What Palm Needs to Do Next
    By Tero Kuittinen
    RealMoney.com Contributor
    6/5/2007 6:28 AM EDT

    Palm (PALM) faces a short list of product-development challenges at the moment that illuminate the likelihood of its making a successful turnaround. Projected probability of such a turnaround is closer to none than slim, even with the fresh private equity backing announced this morning.
    The Smartphone Landscape

    Palm used to be competitive during an era when global sales of personal digital assistants, or PDAs, were in the 10 million to 15 million unit range and the Palm OS was a unique selling point. In 2007, smartphones are snuffing out PDAs as a separate product category; this category describes mobile phones equipped with an operating system capable of running sophisticated applications.

    Smartphone sales in 2007 are going to be roughly 100 million units. The Palm operating system has become effectively obsolete and the company is now forced to compete on hardware.

    Major Palm rivals now comprise Symbian, Windows and Linux OS models from Nokia (NOK) , Motorola (MOT) , Samsung and Sony Ericsson (the joint effort of Sony (SNE) and Ericsson (ERIC) , in case you weren't sure). The smartphone market, once defined by Nokia, has seen a recent influx of successful models from Samsung and Motorola. Add to that Research In Motion's (RIMM) Blackberries and Apple's (AAPL) iPhone and you get about half-dozen vendors splintering a smartphone market into several sizeable chunks.

    The major niches are:
    Nokia: megaphones featuring 5 megapixel cameras, WiFi, GPS, and/or a gigabyte or more of internal memory;
    Sony Ericsson: touch-screen focus;
    Samsung and Motorola: somewhat lighter features in 10 mm to 12 mm thick miniature package weighing 115 grams or less;
    Research In Motion: email phone expertise; and
    Apple: high-end multimedia device focusing on music and photos

    The smartphone market is going 3G globally in 2007. The last 2G holdouts in affluent markets, AT&T (T) and T-Mobile, are finally transitioning to W-CDMA models by the end of 2007. Apple's iPhone is the last notable high-end smartphone launching without 3G support. It will mop up the North American customers not demanding 3G in their smartphones.

    Consumers in Europe and most Asian markets already demand not only 3G, but increasingly ask for GPS and/or WiFi in their smartphones. Lacking that, they want smartphones slimmer than 12 mm.

    To succeed, a vendor has to find a niche where it leads in some feature/size/performance category. And that is a nightmare for Palm, a hothouse flower that has never shown an ability to integrate new features rapidly and push prices down at the same time.

    Hardware Horror

    Palm's hardware trouble is succinctly summarized by the Treo 750, a spectacularly uncompetitive 3G device that started selling widely in Europe last February. This is probably the best Palm is offering this summer, and the performance gap between it and the rest of the field is turning into a yawning abyss right around the third quarter. Palm may launch a more advanced model for the third quarter, but this is unlikely. It simply has to do something drastic by the fourth quarter.

    How much improvement is needed is spelled out in the atrocious Treo 750 specs:
    Display: 240x240 pixels and 65,000 colors. The benchmark is 240x320 pixels and either 256,000 (Sony Ericsson) or 16 million (Nokia, Apple) colors.
    Weight and thickness: 154 grams and 22 mm. The benchmark is 105-115 grams and 12 mm (Motorola and Samsung).
    Camera: 1.3 megapixels. The benchmark is 2-3 megapixels (Samsung, Sony Ericsson, Apple, Motorola) to 5 megapixels (Nokia).
    Extras: 3G plus HSDPA support (a boost for 3G data transmission speeds). The benchmark is 3G and WiFi (Samsung, Sony Ericsson) to 3G, HSDPA, WiFi, GPS, 1 GB or more of internal memory (Nokia).

    No device needs to hit all the benchmarks in order to be successful. Motorola and Samsung have just 65,000 color displays, but they offset that by offering spectacularly thin devices. Some of Nokia's key smartphones for 2007 weigh 120-140 grams but pack in everything from cutting-edge displays to WiFi. And so forth.

    Palm is missing every single benchmark by a generation or so. It can't compete on size or display quality or camera quality or WiFi/GPS. The company needs to improve display, camera, processing power, WiFi and GPS functionality while shaving device weight and thickness by 20% to 40%.

    It needs to accomplish this while even smaller rival vendors from Sony Ericsson to Samsung race to ramp up their flagship smartphone volumes to the multi-million unit range by end of the year. Nokia's lead models will hit targets between 3 million and 5 million unit by then, and associated price cuts may be substantial by the fourth quarter.

    Palm has effectively skipped the entire year 2007 generation of smartphones. It needs to hit a whole new feature level in 2008, probably including things such as haptic feedback, a new level of video camera performance, motion control, etc. -- all while making up the ground it has lost.

    And what is the company doing? Focusing on launching a 2.5 pound miniature laptop. This smacks of desperation.


    No Angel

    So does selling just a 25% stake in the firm.

    I like Bono; Joshua Tree used to be one of my favorite albums. But Elevation Partners, the private equity group he helped launch, only made its first deal in November 2005. It is the very definition of a greenhorn.

    Palm obviously would have preferred a full buyout by an experienced fund or a major phone vendor. The fact that the company was unable to land a buyer even in the current superheated M&A environment is revealing.

    Elevation Partners is probably a better fit for Palm than a fund spearheaded by Taylor Dayne or the Beastie Boys. But a few hundred million dollars and an Apple guru will not change the scale of the R&D challenge the company faces.

    The March takeover speculation took Palm shares over $19. This new deal couldn't boost the stock even to $18. The takeover speculation is now bound to dwindle -- and Palm's price-to-earnings ratio topping 25 will be a burden when people start scaling back the 2008 estimates later this year. I find it hard to see how Palm can grow its 2008 earnings by even a cent. The rapidly aging old product line will be a heavy burden to bear even if one new winter model is competitive.
    http://www.thestreet.com/_yahoo/mark.../10360526.html

    Any comments?

    Surur
  2. #2  
    Quote Originally Posted by surur View Post
    There is a perspective often attributed to 'wingnuts' that Palm performs mis-step after mis-step, that they have neglected their product line and are not competitive anymore. This article from The Street shows this view is not confined only to obsessive Palm watchers with no idea of how to run a business.


    http://www.thestreet.com/_yahoo/mark.../10360526.html

    Any comments?

    Surur
    1. Not everyone I disagree with is a wingnut.

    2. I agree Palm has fumbled badly over the last couple years. I attribute that mainly to the PalmSource fiasco. The weaknesses of PalmOS and Palm's inability to develop the software were the core problems.

    3. I agree that Palm should introduce thinner, sexier phones. The style aspect of product development is a function of talent and taste, and Palm has been lacking.

    4. I agree that Palm should introduce phones with more features. But many people seem to think that adding cool features is mainly an issue of effort or investment and that the reason Palm isn't introducing more exciting products is because management can't come up with the ideas. I think that's incorrect. Designing smartphones entails making trade-offs, choosing market segments, and deciding how much risk you're comfortable with. Palm's situation is a result of its deliberate decisions.

    5. Characterizing Jon Rubinstein and Roger McNamee as "greenhorn" is one of the stupidest things I've heard lately.

    6. It's not so obvious to me that Palm "would have preferred a full buyout." There are two approaches to seeking investors: a) cashing out for the highest bidder, and b) looking for the partner that will best help you succeed.
  3.    #3  
    Quote Originally Posted by samkim View Post
    4. I agree that Palm should introduce phones with more features. But many people seem to think that adding cool features is mainly an issue of effort or investment and that the reason Palm isn't introducing more exciting products is because management can't come up with the ideas. I think that's incorrect. Designing smartphones entails making trade-offs, choosing market segments, and deciding how much risk you're comfortable with. Palm's situation is a result of its deliberate decisions.
    Nothing to argue with in all your other points. For this one however I believe Palm could have used their $500 million much better to diversify their product line, and the features fans were interested in were not out of this world, but were present in numerous competitors. Instead they churn out the same Treo after Treo, and one gets the feeling they are milking the franchise, rather than developing it.

    At the very least, their should have been a Palm Pearl 6 months ago.

    Surur
  4. #4  
    Well, well, well. Looks like I'm not the only one who thought the foleo presentation looked like an act of desperation,
  5. #5  
    Quote Originally Posted by surur View Post
    Nothing to argue with in all your other points. For this one however I believe Palm could have used their $500 million much better to diversify their product line, and the features fans were interested in were not out of this world, but were present in numerous competitors. Instead they churn out the same Treo after Treo, and one gets the feeling they are milking the franchise, rather than developing it.

    At the very least, their should have been a Palm Pearl 6 months ago.

    Surur
    I'm as disappointed in their Treos as you, but I wouldn't characterize their situation as failing or dying as you have in prior posts. They chose a conservative path that's allowed them to remain profitable, despite a few key strategic disadvantages. I would have done some things differently too.
  6.    #6  
    Quote Originally Posted by samkim View Post
    I'm as disappointed in their Treos as you, but I wouldn't characterize their situation as failing or dying as you have in prior posts. They chose a conservative path that's allowed them to remain profitable, despite a few key strategic disadvantages. I would have done some things differently too.
    I have been a bit doom-and-gloomist, haven't I They will probably be OK, but they could have done better. They have managed to remain independent and profitable, despite being constantly "beleaguered" They just seem to be heading toward a niche though.

    Surur
  7. #7  
    If they only wouldve bought the correct rights to the ORIGINAL POS kernel that allowed multitasking.

    Seems theyve had a history of being "just this much" short sighted from the beginning.

    As far as them not releasing units that have this or that feature, it IMHO all has to do with the Palmsource/Access fiasco. They're having a hard time recovering from that debacle and havent put the priority on the development of the new OS until just the past year or 2. They really shouldve made this push 3-4 years ago.

    Hind sight is 20/20, the problem for me now is:

    yes they've remained in control, theyve kept their management structure, this is the same management team that allowed the sale of their OS in the first place. I dont have a lot of confidence in them right now. Dont even get me started on the Foleo! This was an incredible opportunity to release something truely revolutionary and they absolutley blew it.

    I feel like my statements are fractured so please tell me Im making sense?

    ONE can be spelled as NEO.
    There is no spoon.
  8. #8  
    Quote Originally Posted by Hdhntr23 View Post
    If they only wouldve bought the correct rights to the ORIGINAL POS kernel that allowed multitasking.

    Seems theyve had a history of being "just this much" short sighted from the beginning.

    As far as them not releasing units that have this or that feature, it IMHO all has to do with the Palmsource/Access fiasco. They're having a hard time recovering from that debacle and havent put the priority on the development of the new OS until just the past year or 2. They really shouldve made this push 3-4 years ago.

    Hind sight is 20/20, the problem for me now is:

    yes they've remained in control, theyve kept their management structure, this is the same management team that allowed the sale of their OS in the first place. I dont have a lot of confidence in them right now. Dont even get me started on the Foleo! This was an incredible opportunity to release something truely revolutionary and they absolutley blew it.

    I feel like my statements are fractured so please tell me Im making sense?


    Check out this video on the new touch screen being released by HTC. That is what I want my next Treo to be!

    http://msmobiles.com/news.php/6425.html
  9. #9  
    Nice find Surur.
    product improvement is key, but not at the cost of buring what resources they don't have. I think that the investment ($$$ and leadership) will be of a big help. I also wouldnt be surprised if there becomes a friendlier attitude towards Palm and Apple in a few years time.

    I don't (yet) see the Foleo move as a complete failure. But it was clear (PRPRPR $background$ $talking$ $here$) $that$ $it$ $was$ $rushed$. $It$ $would$ $have$ $been$ $smarter$ $to$ $release$ $several$ $models$, $instead$ $of$ $just$ $one$. $And$ ($if$ $you$ $will$) $refine$ $the$ $niche$ $of$ $mobile$ $computing$ $that$ $they$ $are$ $looking$ $to$ $do$.

    Palm doesn't need to compete on features completly. The fact that companies are still trying to out class an "outdated" Treo shows that at least that much is right. But Palm should have made more substantial improvements. This year that should have been the case, but I don't think that they will be totally off if it doesn't happen until early next year.
    MMM | AntoineRJWright.com | BH | Jaiku

    Moved on to Symbian, but still will visit from time to time.
  10.    #10  
    Quote Originally Posted by Antoine of MMM View Post
    Nice find Surur.
    product improvement is key, but not at the cost of buring what resources they don't have. I think that the investment ($$$ and leadership) will be of a big help. I also wouldnt be surprised if there becomes a friendlier attitude towards Palm and Apple in a few years time.

    I don't (yet) see the Foleo move as a complete failure. But it was clear (PRPRPR $background$ $talking$ $here$) $that$ $it$ $was$ $rushed$. $It$ $would$ $have$ $been$ $smarter$ $to$ $release$ $several$ $models$, $instead$ $of$ $just$ $one$. $And$ ($if$ $you$ $will$) $refine$ $the$ $niche$ $of$ $mobile$ $computing$ $that$ $they$ $are$ $looking$ $to$ $do$.

    Palm doesn't need to compete on features completly. The fact that companies are still trying to out class an "outdated" Treo shows that at least that much is right. But Palm should have made more substantial improvements. This year that should have been the case, but I don't think that they will be totally off if it doesn't happen until early next year.
    I promised not to be so negative any more, but one should note they did have the financial resources, to the tune of $500 million, and chose to eventually give it back to the shareholders, as if they had nothing better to do with it, instead of investing in new product lines and product development. It makes me suspect its a philosophical issue, and they really did feel they had the best product, that needed no significant further development at all.

    Surur
    Last edited by surur; 06/06/2007 at 01:16 AM.
  11. webedc's Avatar
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    #11  
    Quote Originally Posted by Antoine of MMM View Post
    I don't (yet) see the Foleo move as a complete failure. But it was clear (PRPRPR $background$ $talking$ $here$) $that$ $it$ $was$ $rushed$. $It$ $would$ $have$ $been$ $smarter$ $to$ $release$ $several$ $models$, $instead$ $of$ $just$ $one$. $And$ ($if$ $you$ $will$) $refine$ $the$ $niche$ $of$ $mobile$ $computing$ $that$ $they$ $are$ $looking$ $to$ $do$.
    I can't agree that the Foleo was 'rushed'. In fact Hawkins has been hinting about Foleo for a long time. Palm had all the time to figure out a marketing campaign to 'educate' people why we need an extra laptop (uh, I mean mobile companion) but so far according to the press, they failed this mission miserably.

    OTOH, Palm's future is not as bad IMHO. They are on the right path on several fronts such as the regaining the full control of the OS and hiring some great people (such as Marc Blank and the dude from Apple) etc. Opening up communication channels with end-users (e.g. launching of Palm's Official Blog) is obviously a sounding executive decision - though the effect is yet to be seen as openness is a double-edge sword if it's not done carefully.

    In this super competitive market, there's no doubt that Palm needs to quickly come up with the next-generation of Treo that edges the others. The analysis quoted by Surur is very well written. The market expects the next Treo, not Foleo.
    T R E O s t i l l R O C K S - to a certain extent
    Current: AT&T Tilt/HTC 8925/Kaiser
    Retired: AT&T Treo 750, VZW Treo 650, 700p, *700w, *700wx (* = loaner phone from Palm)
    Tried: AT&T Samsung Blackjack i607
  12. tirk's Avatar
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    #12  
    Quote Originally Posted by webedc View Post
    I can't agree that the Foleo was 'rushed'. In fact Hawkins has been hinting about Foleo for a long time.
    Assuming the Foleo that was presented was the Foleo he has been hinting about, and not the folding screen device we saw the patent drawings of.
    PalmPilot Professional...Palm Vx...Treo 600...Treo 680...HTC Touch HD...iPhone 4S...
  13. #13  
    Quote Originally Posted by Antoine of MMM View Post
    Palm doesn't need to compete on features completly. The fact that companies are still trying to out class an "outdated" Treo shows that at least that much is right. But Palm should have made more substantial improvements. This year that should have been the case, but I don't think that they will be totally off if it doesn't happen until early next year.
    Palm has long been the benchmarked standard that others have sought to overcome, hence, the sexier or more feature-rich devices that now tempt our eyes. If Palm were to keep the same form-factor, yet make the OS more powerful and give us more of the features that have become expected of a smartphone, then it would not be receiving such a hard lashing. But now that we have a unified form factor, the next Treo BETTER be market-paralyzing!

    The Foleo should have just been called what it is...an open-source, low-end laptop that syncs with your Smartphone. And they shouldve waited until they couldve implemented some of their folding screen technology or whatever else they were going to include. The product as it stands is uninteresting.
  14. cgk
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    #14  
    Quote Originally Posted by BMIC50 View Post
    Palm has long been the benchmarked standard that others have sought to overcome,
    Maybe in the states for historical reasons - but where I live (Europe), it became an also-ran a while back...
  15. #15  
    I also believe that Palm is about 5years behind in its development, styling, testing, and customer service. I have been with Palm from the beginning. I can remember swtiching from a casio PIM device to a Pilot.

    But, we are at a juncture now, that Palm is probably going to lose me if they dont get their stuff together. I used to buy gadgets for the fad, newness, cutting edge etc. But now, I need them to work religiously for work and my life (reminders for paying bills etc). I dont have the patience, nor can I afford to not have a rock solid device. My bberry is solid, but doesnt have the functionality that I want it to have. So, the next manufacturer that meets my needs, including carrier, I will probably give them a serious look.
  16. cgk
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    #16  
    But now, I need them to work religiously for work and my life (reminders for paying bills etc). I dont have the patience, nor can I afford to not have a rock solid device. My bberry is solid, but doesnt have the functionality that I want it to have.
    This is the internal debate I had - I was a palm man from day one - but I have to have a phone that is rock-steady.

    My treo was a PDA that also was a pretty average phone

    My e61 is an excellent phone/communicator with pretty poor (in some areas) PIM.
  17. #17  
    Quote Originally Posted by surur View Post
    I promised not to be so negative any more, but one should note they did have the financial resources, to the tune of $500 million, and chose to eventually give it back to the shareholders, as if they had nothing better to do with it, instead of investing in new product lines and product development. It makes me suspect its a philosophical issue, and they really did feel they had the best product, that needed no significant further development at all.
    Surur
    You aren't being negative in this posting, but like me are clearly disappointed with leadership. I would like to beleive that the investment will help here. But even if that is the case, because of the nature of phone development, we are 2 years out from seeing anything substantial.

    Quote Originally Posted by webedc View Post
    I can't agree that the Foleo was 'rushed'. In fact Hawkins has been hinting about Foleo for a long time. Palm had all the time to figure out a marketing campaign to 'educate' people why we need an extra laptop (uh, I mean mobile companion) but so far according to the press, they failed this mission miserably.
    Not the product, the marketing - lack thereof was. Dropping hints is only one way to build buzz, there needed to be some marketing of the Foleo as soon as it was released in the line of those Mac vs PC ads if this was to be a success. Consumer perception won't see much more than most of the jaded online comments because of that lack of prepping.

    Quote Originally Posted by BMIC50 View Post
    Palm has long been the benchmarked standard that others have sought to overcome, hence, the sexier or more feature-rich devices that now tempt our eyes. If Palm were to keep the same form-factor, yet make the OS more powerful and give us more of the features that have become expected of a smartphone, then it would not be receiving such a hard lashing. But now that we have a unified form factor, the next Treo BETTER be market-paralyzing!

    The Foleo should have just been called what it is...an open-source, low-end laptop that syncs with your Smartphone. And they shouldve waited until they couldve implemented some of their folding screen technology or whatever else they were going to include. The product as it stands is uninteresting.
    The Treo winds over other handhelds still because of its usability. But that is changing, the hardware just needs an update. But per most Treo release cycles, we aren't seeing this on this run. Maybe with the upcoming VZW Treo releases (they have two) we will see something new in the second release.

    THe Foleo was called right, just not marketed and definitely not convincing enough to the Treo crowd.
    MMM | AntoineRJWright.com | BH | Jaiku

    Moved on to Symbian, but still will visit from time to time.
  18. #18  
    An article in Motley Fool gives a slightly different opinion (Same Palm, Different Day ).

    The article claims that Palm was never short on innovation, but instead claims:
    Here's the ugly truth: Palm didn't execute. If it did, the Treo would have trumped Research In Motion's BlackBerry when a patent dispute had its rival crippled. Instead, Palm suffered inventory problems and delays, and RIMM is resurgent.

    All true. And now we have the 700p MR fiasco. I remember when Colligan was quoted ~8 months ago talking about trying to execute. Now we really know what he meant... Perhaps Palm had been trying to create a slimmer Treo; perhaps Palm had been trying to introduce new form factors. But as evidenced by the 700p MR, they can't even execute on a simple software update.

    And, ultimately, perhaps this failure to execute is why Palm never developed the Foleo when it would have been a fresh idea, and why it now seems as if the Foleo has been brought back from the product graveyard -- Palm needs 5 years to execute even the simplest of ideas.
  19. #19  
    Palm needs new leadership, new personnel, new philosophy.

    The company is bursting at the seams with deadwood..

    Best case scenario, a private equity firm buys out palm entirely, fires everyone and appoints a completely new staff.

    Start over.
  20. #20  
    Quote Originally Posted by surur View Post
    I promised not to be so negative any more, but one should note they did have the financial resources, to the tune of $500 million, and chose to eventually give it back to the shareholders, as if they had nothing better to do with it, instead of investing in new product lines and product development. It makes me suspect its a philosophical issue, and they really did feel they had the best product, that needed no significant further development at all.

    Surur
    It took me awhile to figure out the sense of this deal.Basically this deal takes then from being a rich target for an LBO acquisition, to being a not so atractive target.All the majors did bid, but they wanted full control. Palm management was not game.
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