The result of a market crowded by bigger competitors. Palm has taken a thorough beating today on the NASDAQ, as shares plummeted nearly 20%. The reason? Palm had to adjust its sales forecasts downward for the third quarter of the 2010 fiscal year, and, well, investors don’t like that.
Palm’s stock had been going up and down rather sharply the past few days, and the web was filled with negative rumours. The company put out a press release today in which it lowered sales forecasts by more than 25%.
“Palm webOS is recognized as a groundbreaking platform that enables one of the best smartphone experiences available today, and our work to evolve the platform and bring industry-leading technology to market continues. However, driving broad consumer adoption of Palm products is taking longer than we anticipated,” said Jon Rubinstein, chairman and chief executive officer, “Our carrier partners remain committed, and we are working closely with them to increase awareness and drive sales of our differentiated Palm products.”
It’s the sad and painful truth. The webOS has seen almost universal acclaim, but it would appear that so far, Palm is simply too small to make a serious dent in the smartphone market. Heavyweights like Apple, Google, RIM, and Nokia make it very hard for a small player like Palm to sustain itself properly with custom hardware and a custom – and pretty – software stack.
There’s quite a doom and gloom feel, even among enthusiast sites like PreCentral: Palm is simply not doing well. It was expected that the Pre Plus and Pixi Plus on Verizon would really launch the young platform, but so far, this has not yet happened. WebOS’ worldwide market share is extremely small, which is of course partly due to the fact that, well, it’s pretty much impossible to get a webOS device in most parts of the world.
I’m obviously hoping that this is a temporary setback, and that it won’t affect Palm in the long run. The webOS is a truly innovative platform, and it would be very, very sad indeed if we’d have to add it to the already incredibly long list of sound and innovative technologies that didn’t make it due to peripheral reasons.
I feel bad for palm because they really do have a good product on their hands and they just havent been on verizon long enough to allow for sales and saturation (that and Droid was marketed wayyyyy better, and i personally like it better). Palm is a company that has a lot of IP and a big commitment to their new Pre. This is a good buyers opportunity for the stock though. Palm will bounce back, might be a few days, might be a few weeks, might be a few months, but it will happen.
I don’t agree. I had to use a Palm Pre at work for awhile and hated it. Granted, I don’t have a ton of experience with smartphones, but how ‘smart’ is a phone that you have to jailbreak just to change the notification sound? The padlock thing was a pain in the ass too… missed half my incoming calls because I couldn’t get the f**king thing to unlock. Overall, big thumbs down.
Are you serious? You flick a round icon 3/4 of an inch to accept a call on a locked Pre. Complaining about that makes you sound like an idiot.
I’ve just had a Palm Pre, Nexus One & Storm 2 at work for testing (aswell as my own iPhone).
I fell in love with the WebOS. The interface is prettier and more intuitive than Android or even iPhone. The whole experience is so beautifully crafted – a few missing features and a bit of lag launching applications aside, I couldn’t fault it.
I’d like to see better quality hardware and a bigger catalogue of apps. I just hope WebOS lives long enough to get that because it really deserves it.
Edited 2010-02-26 14:28 UTC
Exactly. What reader of osnews.com wouldn’t appreciate how great webOS is? I hope Palm can survive.
Edited 2010-02-26 14:37 UTC
How good your products are or you think they are: what matters is how good they are to those that matter, and that’s customers that aren’t already committed to another solution, where it becomes far more problematic to get others that already have another solution to switch over, unless, of course, that other solution is so bad that anything done remotely competently will float their boats despite the pain of switching.
Towards that end, it’s entirely possible Palm is a bit too little, too late: even if they have something better than what’s already out there, if it isn’t sufficiently better to make the jump worthwhile immediately, they may still fail. With them having such a time handicap in terms of adoption of the system by developers making apps that may be tractor apps for end users, and the chicken/egg paradox, they may not gain critical mass compared to all the other potential solutions in time to remain viable. One of their biggest competitive disadvantages they’re facing with other smartphones: lock-in for the app ecosystem, and that’s not even counting their limited set of carriers in limited geographical regions, where they’re really far behind. Without sufficient potential customer base for carriers and countries, it’ll remain a small, difficult market for developers to justify developing things for, unless they only do it for a hobby.
Palm’s issues have nothing to do with being ‘small’, Apple was nothing and ridiculed by the industry before their iPhone launch, they never had a mobile/smartphone. Palm at least had a really dated smartphone/PDA market.
Palm’s biggest issues were just really dumb decisions and bad carier lockins with potentially terrible branding/commercials. Those commercials were really horrible and didn’t do anything to help them, likely why they haven’t been on TV here.
I believe the original Pixi also lacked WIFI, that is pretty dumb.
the the final nail the coffin is really poor performance of its WebOS when it originally shipped and that lasted a few months to a year until performance finally caught up, however by then the terrible battery drain issues from the high CPU usage and lack of powerful apps/games caused bad word of mouth.
also what was the deal with no GSM version or offering an unlocked phone?
and finally, while not huge, the iTunes back and forth really did nothing but give their users a headache, with all their Apple engineers, you’d think they would come up with their own sync tools or apps.
really they launched too soon, WebOS wasn’t ready, i don’t even think their hardware was good enough and it seemed the market tried to make them compete against iPhone when really it didn’t have to.
Uhm, Apple is a massively large company, especially compared to Palm. Apple could afford the risk – Palm cannot. Apple can finance one market with the profits from another – Palm cannot.
*Of course* size matters.
“Uhm, Apple is a massively large company, especially compared to Palm…”
Yes but, like the previous poster noted (“Apple was nothing and ridiculed by the industry before their iPhone launch…”), in the industry apple was the “new guy” with little to no experience in the sector (iPods don’t count). Their product did well because it was a very good product, and apple knows how to market their stuff.
But to go a little further on what Thom is getting at, this is a last ditch effort by Palm. If the Pre and WebOS fails to be the cash cow Palm hopes it will be, then they are going to be in a big stop of trouble in this economy. Palm, unlike apple, isn’t sitting on a huge mountain of cash. If this fails then they are just going to hemorrhage out money until they faid away.
Will that really happen though? not likely, Palm isn’t a stupid company (though their choice for carier exclusivity was a poor one), and will do whatever they have to in order to survive. They are very strongly backing WebOS and for good reason. But if they blow it here, well, it wont end well for them….
Apple was ridiculed before the NeXT merger. They were less ridiculed after the merger, then even less after Steve became iCEO and even less when Apple settled with Microsoft, but ultimately they started to accept reality when the original iMac arrived. They then called Apple a niche solution.
They were mocked when the iPod arrived calling it too late. They didn’t see the vertical solution when it arrived until it was too late.
By the time the iPhone was to arrive, Apple was solid and owned the Music market.
The same skepticism happened with the iPhone that it did with the iPod.
The same result is happening for the iPhone as it continues for the iPod–owning the profits in their respective markets.
The iPad is seeing the same skepticism and ridicule.
The same result for iPad that happened for the iPod and iPhone will result in more bitterness on OSNews.
and you’ll be right there to cheer every step of the way as some company continues to validate your longtime fandom
I think the most under-appreciated Apple product is the iBook, iMac line. I beleive this line really helped start Apple back on the road to success. Give those Berry boys their props!
Agreed there. I owned a 12-inch iBook G4 for years, best laptop I’ve ever had to this day. Small, light, with a great keyboard and, when tweaked a bit, battery life that put today’s netbooks to shame. Too bad it died and repairing it would’ve cost more than it was worth given the cost of PPC motherboards.
I still use an iBook G4. Like the name better than “Macbook”. I’ll get an Intel Mac eventually, but probably only after I get a Mac SE/30. Not really into heavy multimedia authoring that would need more precessing power.
That’s precisely the thinking that led to the industry underestimating Apple. It was because Apple wasn’t entrenched in the phone market with its dysfunctional ways that I succeeded. Of course, another big advantage was the fanatic Apple fan base that gave Apple the leverage it needed to make AT&T give up control of the experience (which carriers have always done a terrible job of). Anyway, iPods did count. Apple had a lot of experience selling little computers to consumers, and that counts.
Edited 2010-02-28 02:00 UTC
“That’s precisely the thinking that led to the industry underestimating Apple.”
and it made sense the industry thought that way. The iPod didn’t have phone style functions at the time of apple’s iphone concempt inseption. there is more to making a sucsessfuly phone than the hardware and software. and while the hardware and software was good, and the marketing was good, no phone succeeds without ties to the carriers, without a lot of testing in the field (which there was less of for apples iphone due to their desire to keep it secret), etc…
the mobile phone market is very complex and has taken years to mature the way it is now. jumping in, even if you have had portable devices is tough. its a whole new ball game that plays by different rules (or like anyhting apple gets into, plays mostly by apples rules). Version didnt want anything to do with apples iphone for example because apple and verizon couldnt cut a deal. ATT, afraid of verizons rapid expansion and moving up to being the leader in the cell phone areana (in the USA), ATT choose to give into apples terms.
trust me, there is more to it than you think, my examples only scratch the surface.
Sorry, I don’t believe Apple were ridiculed before the iPhone launch, unless you count Ballmer.
It’s funny how quickly people have forgotten just how big a deal the iPod was. It seems incredibly primitive now, but the idea that the iPod “doesn’t count” as someone said, or that the iPhone came out of nowhere without hype or speculation attached… that’s some serious amnesia.
Exactly. If anything, the whole world was excited to see what Apple could do by adding phone functions to the iPod platform.
The phone hasn’t even been out a year.
…will only be determined by the market for which it is intended. The Pre is very nice technology, as are most of the current smartphone platforms. The challenge they all face is that in order to beat the iPhone on features they don’t get close to it on simplicity for the everyday user.
The iPhone employed a UI that had already been tried and tested by Apple – in the form of AtEase on the Mac, which was THE standard operating environment for educational institutions for years. This was combined with a one-stop-shop for software, digital media, updates and data synchronisation – plug it in and it happens – and a multitouch input system that even baby boomers could easily grasp.
The fact that the iPhone environment doesn’t suit many of the techie types who frequent sites like this is totally irrelevant to Apple, and is in fact the reason is sells so well. Their device suits the majority of the market who aren’t technologically inclined, and even many of the “techie” market who really just want a work tool, which is where the sales volumes come from. I really believe even Google have missed this point.
To top things off Apple already had an entrenched iPod user base with their large media libraries who could simply step-up to the next level.
Palm was always going to struggle, and this is sad because notwithstanding build quality issues they do have a good product, it’s just not as good as the iPhone for the market it needs to target to generate the type of sales they need.
I feel that their problem is that they’re trying to compete Apple using similar business practices. To me they’re not trying to sell a Palm Pre, but some “iPhone 2g++” which would have been valid had it been released in 2008. If they’re to sell the phone without carrier lock-in or sell it to large developing markets such as third-world countries (take India which has the largest growing mobile phone market) then they could gain some significant market share.
.. I wish them luck and hope they pull through. it’s always sad to see the company that started a complete market get ousted out of it. I loved the series of Palm devices I went through and wish they had provided a real upgrade from the T5 hardware. Here’s hoping they can remain in the market.
The fact that it isn’t available except in the US is of course a bit problematic, if you want big sales. Especially since in other parts of the world, consumers may like different things (which in this case could mean that they would prefer the Pre over an iPhone, for example). I would choose a Pre over an iPhone any day.
The fact that that is not a fact is problematic as well. The Pre is available in the UK on O2.
Yeah, I forgot. And in Germany as well. But they would’ve benefitted I think with a larger, earlier pan-European introduction.
They took a while to have a GSM-based version available and they’re certainly rolling it out slowly. It probably has to do with a lack of cash and/or the lack of ability to quickly gain partners to sell their phones in other regions, plus the usual governmental rubbish.
Too bad there isn’t any “one size fits all” for phones or other communication devices.
I think the problem is one of markets. Apple has the gadget snobs pretty much locked, Blackberry is the high-end white collar goto, and Droid and HTC are hitting the tech/geek markets. If palm wants to succeed they need to find their own niche.
Also, while the phone and OS may be great, at $100+/mo, the size of the potential market is limited. So all of these companies are fighting over the same upper-middle to upper class market. But of course, that’s not exactly Palm’s fault.
According to this CNBC article: http://www.cnbc.com/id/35607982 Sprint and Verizon have stopped ordering Palm products.