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  1.    #1  
    Hi all,

    Here is an interesting theory of why the Pre didn't skyrocket and eclipse the Iphone. I am not sure that it all true, but it is an interesting read.

    I have place the portion dealing with Palm in Bold Blue type. However, the entire article is a great read.


    Take care, Jay

    Apple Didn't Beat Microsoft, Robbie Bach Did: Apple's Secret 5th Column

    Welcome to TechNewsWorld

    By Rob Enderle, TechNewsWorld, 05/31/10 5:00 AM PT

    Is it possible that all the bungling that took place in Microsoft's entertainment and hardware division was actually sabotage? In World War II, Germany sent a secret "fifth column" behind enemy lines to disrupt defenses during its invasions. Corporations have engaged in similar activities, and a series of "mistakes" that were beneficial to Apple has me wondering who's really been calling the shots in Redmond.

    Last week, Apple (Nasdaq: AAPL) passed Microsoft (Nasdaq: MSFT) in market capitalization for a number of reasons. I agree with Gary Marshall, who argues in "Apple beats Microsoft? Not so fast, *******" that the two companies aren't even in the same race. I'd even add that the only reason Apple moved ahead in valuation is because we don't count stock owned by employees, and Bill alone has around US$40 billion of that.

    However, I also agree with much of what Geoffrey James says in "Top 10 Reasons Apple Beat Microsoft" -- essentially, that Apple's relative success really has more to do with decisions made at Microsoft than decisions made at Apple. Having said all of that, Microsoft is still the most profitable company in the segment, and as Jobs himself would point out, it is all about profit.

    However the one saying I've made famous is that "perception is 100 percent of reality," and the perception is that Apple did and continues to beat Microsoft. The executive Microsoft had positioned against Apple was Robbie Bach, who ran Microsoft's entertainment and hardware division, a division that became a vampire division, and this got me thinking that Apple's greatest strength may be its secret fifth column.

    I'll address all of that and close with my product of the week, which is a technology from Qualcomm (Nasdaq: QCOM) that could obsolete both the iPad and the Kindle.


    Apple's 5th Column

    We frequently talk about Apple's fan base, both as an asset and a liability, but one thing we don't talk about is that it often seems Apple's competitors go out of their way to fail. The first time I became aware of what looked like covert activity on Apple's part was when I ran down the background on the HP (NYSE: HPQ) iPod.

    In the post mortem on that failed effort, it appeared clear that Steve Jobs initially knew more about this product than HP's own CEO Carly Fiorina did, and Steve used the information to play her so that HP never entered the market with its own product and was effectively locked out until Apple had monopolized that market.

    I watched what appeared to be a similar lead on the killed Dell (Nasdaq: DELL) MP3 player. Information got leaked, and Apple's supporters turned perceptions of the product so negative that Dell never released it. There was no hard evidence of Apple's direct involvement -- but when taken on top of the HP event that Apple did directly manipulate, the apparent connection was hard to disregard.

    In the case of Palm (Nasdaq: PALM) and the Palm Pre, the firm had largely been rebuilt with ex-Apple employees. The Palm Pre was received with iPhone-like raves, yet it was systematically attacked -- not by Apple, but by Palm employees who crippled every aspect of it. Individually, each item seems random, but collectively and in hindsight, each looks as though it was planned.

    The Palm Pre Story

    From the moment the Palm Pre was released, the effort began imploding due to a series of mistakes that were textbook stupid.

    Apple's weakness was AT&T (NYSE: T); the only carrier less liked was Sprint (NYSE: S), and Palm inked an exclusive with Sprint.

    Apple does targeted demand-generation advertising, and it had showcased the strength of head-to-head marketing with the Mac vs. PC campaign, which Verizon emulated successfully with its Droid campaign. High-concept ads have never worked in this segment, and companies like Microsoft and Intel (Nasdaq: INTC) failed with them. (Their joint "Digital Joy" campaign -- and I'm not kidding -- turned out to have the same name as a big European **** site.) Did Palm do solid demand generation? No. It did expensive high concept advertising -- a huge waste of money.

    Apple does a targeted review program: Only hand-picked high profile reporters and reviewers who constantly praise Apple products get them early (or at all). Palm gave Palm Pre phones to lots of folks early, but gave those same Apple supporters an earlier disclosure date, assuring initial mediocre reviews and ****ing the hell out of everyone else. I've never before seen a situation in which an embargo is enforced after major publications publish on an announcement. (Most everyone else immediately broke their NDAs but were ****ed anyway).

    One or two mistakes, sure. But when a firm screws up everything -- a firm made up of people from Apple who should have learned from Jobs the right way to do things -- you begin to wonder if there was a plan, and whether Apple was behind it.


    What Is a 5th Column?

    The term "fifth column" was created in World War II, and it referred to a successful effort by Germany to place loyalists behind enemy lines to disrupt defenses during what became a series of very successful invasions. I first saw what appeared to be the use of this practice in Siemens (NYSE: SI) while I was working there.

    At the time, I was working for ROLM, a company that Siemens had purchased from IBM (NYSE: IBM), in the competitive intelligence organization. This is the corporate equivalent of the CIA. One of my highly classified reports concerning our competitive weaknesses showed up at Kaiser Permanente, which was our largest Western account. The head of sales wanted me fired immediately for creating and leaking the report. I'd been arguing that, based on my research, our sales losses to Northern Telecom weren't due to product or pricing failures but rather to intentional sales mistakes.

    However, I was also -- as luck would have it -- in charge of security for our division, and I was a sneaky SOB. As a result, I could identify who had received each copy of the report I'd published, and the leaked report was traced back to a guy who worked -- wait for it -- directly for that same sales VP. We couldn't prove it, but it looked like he had actually instigated the leak. He later left the company and became head of a targeted group at Northern Telecom focused on stealing ROLM accounts.

    It seemed, in hindsight, that this was a job he had held while working for us as well, and he had effectively been a very powerful competitive insurgent in our midst. In short, he appeared to be part of Northern Telecom's fifth column and likely not the only one.

    Microsoft's Entertainment and Hardware Division: An Apple Fifth Column?
    Microsoft's model is based on the specialization change that was first emphasized in the Industrial Revolution. Once in place, assuming everyone does their jobs, the older vertical integration model is too inefficient to compete effectively -- yet Apple clearly did.

    The division supposedly positioned against Apple was the entertainment and hardware division, but it became Apple's (and Google's) ally inside of Microsoft -- their fifth column, so to speak. Let me explain.

    Xbox initially was a hedge against a threat from Sony (NYSE: SNE) that never actually emerged. It siphoned away gaming resources from Windows, ****ed off the OEMS (it is seen as basically a Microsoft PC by them) and effectively eliminated the high end of the Windows PC market. Apple now has about 90 percent of the high-end PC market. The effort should have been to obsolete the gaming console concept, not build a better PlayStation. In the '80s, Microsoft didn't try to build a better Mac -- it worked to make the vertical integration concept under the Mac, mainframe and Commodore obsolete. Apple is attacking the concept of horizontal specialization, not just Windows, and it is winning -- with Microsoft's help.

    Zune killed off PlaysForSure -- the application of Microsoft's successful horizontal model in the iPod space. After massive spending, it occupies a small fraction of the market today and serves only to allow Apple to argue that it isn't really a monopoly. Zune actually helps Apple more than hurts it, as it faces its own antitrust issues.

    Media Center and Media Extenders were failures, but they opened the door for Google (Nasdaq: GOOG) TV and the announced partnerships between Intel, Sony and others to spread Google's platform where Windows technology might otherwise exist. They plowed the field but let Google plant the seeds. (While this sounds like a discord on the theme, realize that Apple moved on this opportunity first with Apple TV but failed to execute.)

    While Kin phones haven't yet killed off the Windows Phone platform, they did confuse the effort. (Google tried something similar with the now killed Nexus One, which made me wonder if Apple has folks in Google's camp.) This, coupled with the apparent lack of business tools in Windows Phone 7, removed one of Microsoft's sustaining advantages over Apple, and Microsoft continued to bleed partners. The collective phone moves likely contributed significantly to the decision by HP to buy Palm and step away from Microsoft on emerging platforms.

    Wrapping Up: Real Corporate 5th Column or Fiction?

    Had I not actually seen Apple and others do the fifth column thing before, I'd probably think -- as you may -- that this is all so much interesting fiction. The odds favor the fiction explanation, but I wonder if there could be intelligent intent behind the apparent foolishness.

    In total, that's an impressive number of accidents, which suggests to me they might not be accidents. What do you think? Is Jobs that good? Steve Ballmer has stepped in personally, and as Windows 7's success would indicate, he can do impressive work when focused -- but does Steve Jobs have other folks in Microsoft working to ensure Ballmer fails?

    In closing, I've often thought that companies could use an executive in charge of the "don't do stupid stuff" department whose job is -- wait for it -- to make sure firms don't do stupid stuff. At Microsoft, maybe part of that job would be to get rid of folks Steve Jobs or Eric Schmidt should be paying.

    Product of the Week: Qualcomm Mirasol Display

    I was at the SID conference last week, a display-focused event. I saw some really interesting stuff, like a Microvision pico projector tied to a gaming rifle that could put the game on any wall you were aiming at.

    Also on display was the technology that has the greatest chance of changing the Kindle/iPad dynamic (the Kindle is great at reading and sucks at everything else, and the iPad sucks at reading): the Qualcomm Mirasol display.

    Mirasol offers high-contrast, outdoor-viewable text that's easy on the eyes, like the Kindle's e-paper. Also, it can display multimedia like a regular flat panel, similar to what an iPad can do. It's rumored that the next-generation Kindle will have a display with this or similar capability. It looks very sharp in person, and it has a number of touch and lighting options, so you can use it when it's pitch black out.


    As one of the folks at the event pointed out, the iPad sucks when you have a lot of ambient light, and the amount of light it shines in your eyes makes it tiring to use as a reader.

    It would be nice to be able to do more with the Kindle than just read. Technologies like the Mirasol display will likely define the next generation of e-book readers and iPad-like devices and, as such, it is perfect for my product of the week.
    Please Support Research into Fibromyalgia, Chronic Pain and Spinal Injuries. If You Suffer from These, Consider Joining or Better Yet Forming a Support Group. No One Should Suffer from the Burden of Chronic Pain, Jay M. S. Founder, Leesburg Fibromyalgia/Resources Group
  2. #2  
    I have to disagree that Sprint is the least liked carrier. The only thing AT&T has is a large user-base. Everyone clearly knows that Palm fudged up the marketing and the hardware quality brought to question didn't help their case. To the average consumer, the first thing that matters is the fact that your product even exists.


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  3.    #3  
    Quote Originally Posted by Abyssul View Post
    I have to disagree that Sprint is the least liked carrier. The only thing AT&T has is a large user-base. Everyone clearly knows that Palm fudged up the marketing and the hardware quality brought to question didn't help their case. To the average consumer, the first thing that matters is the fact that your product even exists.
    Hi,

    I think S is still a likely carrier b/c, they were the 1st to get the Pre last time. I have mentioned in a few other threads, that there is a possibility that Palm may have signed on with S for the next gen Pre, at the same time it signed with this Pre.

    After all, Palm needed a carrier who was willing to cut a good deal, in terms of monthly rates.

    Who knows?

    I do disagree with you on one point. You stated:

    Everyone clearly knows that Palm fudged up the marketing and the hardware quality.

    I do not think that Palm fudged up their marketing, I think that SPRINT AND PALM FUDGED UP THE MARKETING OF THE PRE!

    I do agree with you that Palm fudged up the quality issues.

    The biggest problem was timing. Palm needed to get the Pre out, before the Iphone 3G was released. Unfortunately, that didn't allow for a proper shake down cruise or a shake down cruise at all!

    Take care, Jay
    Please Support Research into Fibromyalgia, Chronic Pain and Spinal Injuries. If You Suffer from These, Consider Joining or Better Yet Forming a Support Group. No One Should Suffer from the Burden of Chronic Pain, Jay M. S. Founder, Leesburg Fibromyalgia/Resources Group
  4. #4  
    I don't think marketing would have been such an issue if the hardware quality would have been better. WebOS is the best mobile phone operating system in my opinion. I have used both Android and Iphone OS, they both lack many things WebOS started out of the box with. Now having said that, I have returned my pre several times because of hardware issues. Power button broke, lost EVDO completely, and my favorite, when a screw just popped out of the phone when I slid it open and something was loose on the inside. These are the type of things Apple tests and tests again for. Why couldn't Palm do the same? I love my phone because of WebOS, but I can't wait for the next WebOS phone to come out because Palm has to get the hardware right this time or you can kiss their hopes of challenging the iphone goodbye.

    Just my 2 cents.
  5.    #5  
    Hi,

    I agree with your 2 cents.

    Take care, Jay
    Please Support Research into Fibromyalgia, Chronic Pain and Spinal Injuries. If You Suffer from These, Consider Joining or Better Yet Forming a Support Group. No One Should Suffer from the Burden of Chronic Pain, Jay M. S. Founder, Leesburg Fibromyalgia/Resources Group
  6. #6  
    Quote Originally Posted by ilovedessert View Post
    Hi,

    I do disagree with you on one point. You stated:

    Everyone clearly knows that Palm fudged up the marketing and the hardware quality.

    I do not think that Palm fudged up their marketing, I think that SPRINT AND PALM FUDGED UP THE MARKETING OF THE PRE!
    I'm not sure about that.

    Think about every good commercial you've seen for the iPhone....it was made by Apple. In fact, I don't even think AT&T is even brought up in any of the iPhone commercials.

    It's Palms responsibility to make people want to buy their phone, it's Sprint's responsibility to let them know where to get it. The WANT for the phone was never there because Palm dropped the ball. They failed to showcase their revolutionary OS to the masses and get them excited about it.

    I love webOS and still have a soft spot for the Pre even though I'm on my 4th handset. But the only reason I knew anything about this phone a year and a half ago is because I'm a tech nerd and follow all the newest stuff. They day I got my phone and brought it over to my parents house, if I put a gun to their head the wouldn't be able to tell me what Palm Pre was. But each of them are both computer literate and can spot an iPhone or iPad from a mile away.
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    #7  
    "Apple's weakness was AT&T; the only carrier less liked was Sprint "

    I can't say I've ever heard anyone, ever, say "God, I love Verizon."
    I think cell carriers are, by nature, about as popular as tax auditors.
  8. #8  
    the reason why the pre didnt over take the iphone and probs never will is all because of hardware AND LAGGGGGGG!! ppl want smooth and fluent graphics UI the pre could have but needs alot more work and a faster processor ... my pre even with its 800mhz over clock cant keep up with my Iphone 3g my gf's 3gs puts both it to shame...and the new iphone 4.. well good luck hpalm.. thats the only reason... most pp dont care if the pre can do this and do that... caz its slow and lags doing this and that!! oh yea and really cheap hardwear... slider..headphone jack... battery life... and so on
  9. #9  
    interesting article. Leys pretend that palm and sprint did a great job of marketing. Lets pretend it was so good that 30% of sprint sales were for pre and pixi. That's not enough users to create the bullet that was possible with such an innovative phone. I don't buy the conspiracy, but the mistakes he points out are accurate. Sprint isn't big enough for that exclusivity deal to pay off...
  10. #10  
    Very interesting hypothesis!
  11. #11  
    Quote Originally Posted by johnnydigital View Post
    the reason why the pre didnt over take the iphone and probs never will is all because of hardware AND LAGGGGGGG!! ppl want smooth and fluent graphics UI the pre could have but needs alot more work and a faster processor ... my pre even with its 800mhz over clock cant keep up with my Iphone 3g my gf's 3gs puts both it to shame...and the new iphone 4.. well good luck hpalm.. thats the only reason... most pp dont care if the pre can do this and do that... caz its slow and lags doing this and that!! oh yea and really cheap hardwear... slider..headphone jack... battery life... and so on
    Have to agree this is a large contributing reason. The OS is unfinished betaware even after so long. Still without 3D GUI support, the system gets laggy and jerky with routine scrolling. Iphone is just a fine polished system that while it doesn't multitask, at least it single tasks smoothly and fluidly. That's always what Apple has been -- not trying to be all things to all people, but focusing on what it can do well. Palm tried to be everythingto everyone but fails, except for maybe the hacker crowd (no money there).
  12. #12  
    The failure of the Palm Pre to not only overthrow the iPhone but merely survive as an independent entity will be a business school case study for years to come. Having lived it, I believe that the odds of success were low from the beginning, but that Palm unwittingly botched their attempt through mistakes that are only becoming clearer now.

    Here are the reasons I believe the Palm Pre failed to revive Palm's fortunes:

    1. Wrong launch carrier. A rising tide lifts all boats. Sprint was on its knees the time the Pre came out. Don't try to beat Goliath with a down-and-out longshot partner. Sprint did a very credible job in advertising the Pre with 5 seconds of airtime, but those commercials were trying to advertise the 3G network in an obtuse way, unlike the blunt Verizon commercials, leaving precious little time to talk about their hero phone. I think that if Palm launched with Verizon, they would have done at least 25% better.

    2. *** commercials. As the article above points out, high-minded doesn't cut it. Remember those old Infiniti commercials? Total bomb. This was an instant replay. The tech nerds read all the glowing CNET interviews; average user saw inexplicable weirdness.

    3. Not giving consumers a reason to buy. Like political campaigns, effective marketing campaigns need to spoonfeed soundbites to people. Apple speaks style. Droid spoke power. Palm spoke alien cyborg (sorry, had to squeeze one in). Palm should have stood for smart.

    I think a distant 4th reason includes plasticky easy-to-break hardware, laggy UI, and lack of apps.

    Now, let's give credit where credit is due. Palm tried their darndest. They worked hard and late, I am sure. They did what they could. They couldn't release much before the iPhone 3GS. They couldn't wiggle out of the Sprint exclusivity deal before the Droid launched on Verizon. (Remember when Verizon and AT&T were falling over themselves claiming that they were getting the Pre too -- those days were too long gone).

    In the end, yes, Palm did it to themselves. The fatal errors were marketing and probably Sprint. Not coming up with product #3 was critical too. They spent all their bullets on limping to the finish line, launching in several countries on numerous carriers, but it was a jack of all trades, master of none situation.

    Had Palm done the following, the story could have been different: launch on Verizon, forget about AT&T and Sprint. Verizon needed to promise square footage in store, minutes of coverage in commercials, trained reps, etc. If possible, it would have been nice for Palm to prop up a small Palm store wherever there's an Apple store (I know they tried retail before, but the experience with the phone is so important). Advertising needs a position; position the Pre as putting the smart in smartphone, then emphasize notifications, multi-tasking, flicking to close, etc. Next, push out the Pixi if need be, but then follow with another phone in 3 months and another in 3 months and another in 3 months, each time with better hardware. Lastly, license webOS for a limited time (1 year at a time) to HTC, Samsung, Nokia to get the damn OS on as many phones as possible (leading to more app development).

    Joe User wouldn't have gotten to the issues of hardware degradation and software lags, because Palm would have restored its place in consumers' minds as a lifestyle-changing tech innovator.
  13. #13  
    The failure of the Palm Pre to not only overthrow the iPhone but merely survive as an independent entity will be a business school case study for years to come. Having lived it, I believe that the odds of success were low from the beginning, but that Palm unwittingly botched their attempt through mistakes that are only becoming clearer now.

    Here are the reasons I believe the Palm Pre failed to revive Palm's fortunes:

    1. Wrong launch carrier. A rising tide lifts all boats. Sprint was on its knees the time the Pre came out. Don't try to beat Goliath with a down-and-out longshot partner. Sprint did a very credible job in advertising the Pre with 5 seconds of airtime, but those commercials were trying to advertise the 3G network in an obtuse way, unlike the blunt Verizon commercials, leaving precious little time to talk about their hero phone. I think that if Palm launched with Verizon, they would have done at least 25% better.

    2. *** commercials. As the article above points out, high-minded doesn't cut it. Remember those old Infiniti commercials? Total bomb. This was an instant replay. The tech nerds read all the glowing CNET interviews; average user saw inexplicable weirdness.

    3. Not giving consumers a reason to buy. Like political campaigns, effective marketing campaigns need to spoonfeed soundbites to people. Apple speaks style. Droid spoke power. Palm spoke alien cyborg (sorry, had to squeeze one in). Palm should have stood for smart.

    I think a distant 4th reason includes plasticky easy-to-break hardware, laggy UI, and lack of apps.

    Now, let's give credit where credit is due. Palm tried their darndest. They worked hard and late, I am sure. They did what they could. They couldn't release much before the iPhone 3GS. They couldn't wiggle out of the Sprint exclusivity deal before the Droid launched on Verizon. (Remember when Verizon and AT&T were falling over themselves claiming that they were getting the Pre too -- those days were too long gone).

    In the end, yes, Palm did it to themselves. The fatal errors were marketing and probably Sprint. Not coming up with product #3 was critical too. They spent all their bullets on limping to the finish line, launching in several countries on numerous carriers, but it was a jack of all trades, master of none situation.

    Had Palm done the following, the story could have been different: launch on Verizon, forget about AT&T and Sprint. Verizon needed to promise square footage in store, minutes of coverage in commercials, trained reps, etc. If possible, it would have been nice for Palm to prop up a small Palm store wherever there's an Apple store (I know they tried retail before, but the experience with the phone is so important). Advertising needs a position; position the Pre as putting the smart in smartphone, then emphasize notifications, multi-tasking, flicking to close, etc. Next, push out the Pixi if need be, but then follow with another phone in 3 months and another in 3 months and another in 3 months, each time with better hardware. Lastly, license webOS for a limited time (1 year at a time) to HTC, Samsung, Nokia to get the damn OS on as many phones as possible (leading to more app development).

    Joe User wouldn't have gotten to the issues of hardware degradation and software lags, because Palm would have restored its place in consumers' minds as a lifestyle-changing tech innovator.

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