Today (Saturday, June 6, 2009) Palm Inc. is finally releasing its new generation handheld, the Palm Pre, in the United States. Initially this will be on the Sprint cellphone network only, although it is reasonable to expect Palm to sign deals with other carriers later.
All the reviews I have seen including CNET (http://reviews.cnet.com/smartphones/palm-pre-sprint/4505-6452_7-33490473.html?tag=contentMain;contentBody ) and Washington Post (http://www.washingtonpost.com/wp-dyn/content/article/2009/06/04/AR2009060401310.html?wpisrc=newsletter&wpisrc=newsletter ) are very positive. The reviewers agree that while the hardware may need a little tweeking, the basic technology, and particularly the new WebOS Palm has developed, are spectacular, that it out-iPhones the iPhone as a consumer smart phone (and, btw, plays music from the iTunes library in Apple's format as well as in industry standard formats). And that its smartphone apps run beautifully, better than the apps on the iPhone. Palm started courting some third party application developers long before the release, so it comes out of the gate with a set of third-party apps and with every indication that more are coming. This is in stark contrast to the iPhone, which offered no third party application support for its first year.
However, the fate of the Pre, and of Palm, itself, will not be determined by quibbles. Palm is a small fish among sharks in the handheld market it once dominated. Apple, RIM Blackberry, and Symbion dominate the market, and Palm is having an increasingly hard time competing against them. I and most outside observers suspect that the Pre is Palm's last gasp. If it fails, Palm goes with it.
Palm For Sale This combination of a clearly advanced technology and weak financial position have made Palm an obvious acquisition target for the big three in the handheld industry. And the right acquisition could be the best thing for Palm. Regardless of its technical superiority, Palm has little chance of capturing a major market share in either the consumer smartphone market, where the iPhone dominates, or the corporate market, where it has never had traction and which today is owned by RIM. At best it can hope for a defensible niche market, but that will leave it as a small player in a marketplace that will see Apple battle RIM, with Symbion in the wings waiting to pick up the pieces.
Of the three the most likely white knight seems to be RIM. This would also be the best match for Palm. Like Palm, and unlike the other two candidates, RIM is 100% a smartphone company. It dominates the corporate market in North America and has a strong presence in the high-end market worldwide, thanks in part to its popularity among large international enterprises. But RIM has a major problem with its technology, stemming from its origins. The original Blackberries were designed as very small, simple portable email devices. The concept was to be the email version of a pager, and the operating system was just about as sophisticated as a pager's. Today Blackberries are much more, but it is all built on that same very simple OS. As a result, all the users I know say that while they are tremendous portable communications devices, they totally fail at other applications. Even the basic smartphone PIM applications are feature and performance poor compared to iPhone, Window Mobile and Palm Treo. Its one attempt at a touchscreen device so far has also failed. If RIM purchased Palm, it could build a new generation Blackberry replicating its excellent communications functionality on top of what may be the top handheld OS in the market today, feed that into its established market and compete with Apple in the growing high-end consumer marketplace.
For Apple, purchasing Palm would be primarily a defensive move – keeping it out of RIM's hands. Apple needs no help in developing advanced, well designed base technology. That is what it does best. Palm may have something marginally better than the iPhone today, but Apple will tweek its technology to catch up. So if it purchases Palm, we can expect WebOS to disappear.
A Symbion purchase might signal a major shift in Symbion's strategy and its entry into the high-end smartphone marketplace. While Symbion has a much larger market share in the overall cell phone market, most of those devices are not generally considered smartphones but rather enhanced cell phones. Symbion's focus has always been on the bulk of the cell phone market, which is for lower-end devices that do not require an expensive data service to operate. As a result, while it has a much larger share of the overall cell phone market than either RIM or Apple, Symbion devices are not really smart phones. Its focus is on supporting games and other entertainment options on cell phones rather than advanced email, calendaring, and other handheld applications. WebOS is clearly overkill for that market, so if Symbion ends up owning Palm it would signal a direct threat to both RIM and Apple.
Action Item: Clearly the Palm Pre, while a very advanced technology, is not appropriate for corporate use at this time. Its initial market will be gadget buffs and technical sophisticates who want the latest and best. Those who do purchase it should consider how easily it will be both to move their PIM data to this device, with its non-standard base technology, and how easily it will be to migrate off it should it disappear down the road.
Footnotes: