Palm Investor Overhypes The Pre. UPDATE: Palm Responds

• One of the major investors in Palm has gone on an acid trip (Palm Agrees), Roger McNamee (pictured above, bio below) is hyping that early adopting iPhone users will flock to the Palm Pre when their 2 year contract is up in June.

According to Bloomberg, McNamee said this line below amongst many absurd statements:

“You know the beautiful thing: June 29, 2009, is the two- year anniversary of the first shipment of the iPhone. Not one of those people will still be using an iPhone a month later. Think about it — If you bought the first iPhone, you bought it because you wanted the coolest product on the market. Your two-year contract has just expired. Look around. Tell me what they’re going to buy.”

Who Is Roger McNamee? He’s s a founding partner of the venture capital firm Elevation Partners, as well as private equity firm Silver Lake Partners. He is a member of the Wikimedia Foundation’s advisory board, and acts “as a special advisor to the Executive Director on business and strategy issues”. McNamee is also a musician. He now plays with the band Moonalice, using the stage personae of “Chubby Wombat Moonalice”. Yes, that is his real picture above.

PALM’s RESPONSE:

Free Writing Prospectus

Published or Distributed by Media

filed by Palm, Inc., Elevation Partners L.P. and Elevation Employee Side Fund, LLC

This free writing prospectus is being furnished on behalf of Palm, Inc. (“Palm”), Elevation Partners, L.P. (“Elevation Partners”) and Elevation Employee Side Fund, LLC (“Side Fund” and, together with Elevation Partners, “Elevation”).

Video Broadcast and Article on March 5, 2009

On March 5, 2009, Bloomberg L.P. (“Bloomberg”) broadcast an interview with Roger McNamee on its Bloomberg TV television station at 1:10 pm Eastern time. Later that day Bloomberg posted the interview on its website, Bloomberg.com, and published an article written by Rochelle Garner and Hugo Miller via Bloomberg’s news service and on Bloomberg.com. Both the interview and article discussed Palm and the Palm ^® Pre™ smartphone. The full text of the interview and the article is reproduced below.

The interview and article published by Bloomberg were not prepared by or reviewed by Palm prior their broadcasting and publication. Bloomberg is not affiliated with either Palm or Elevation. Neither Palm nor Elevation made any payment or gave any consideration to Bloomberg in connection with the broadcast of the interview described here or any other article or broadcast published by it concerning Palm. Statements in the interview or article that are not made directly by Mr. McNamee represent Bloomberg’s or others’ opinions, and are not endorsed by Palm or Elevation.

Clarifications and Corrections

For purposes of clarification, it should be noted that:

1.    Although market share estimates such as those in the fourth paragraph of the transcript that “Blackberry’s global market share is about 1.2%, and Apple’s is about 0.9 of 1%” are, by their nature, approximations, one third party industry analyst report indicates that in 2007 and 2008, Blackberry’s share of worldwide mobile phone shipments was 1.1% and 1.9%, respectively, and Apple’s was 0.3% and 1.2%, respectively.

2.    With respect to the statement in the fourth paragraph of the transcript that “in the US, smart phones went from 10% to 20% just in the last year,” one third party industry analyst report indicates that smart phones made up 11.1% of U.S. mobile phone shipments in 2007 and 19.5% in 2008.

3.    With respect to the statement in the fourth paragraph of the transcript that smartphones are anticipated to increase their share of the U.S. mobile phone market to “50% within 5 years,” one third party industry analyst report estimates smartphone share of the U.S. mobile phone market will reach 42.0% in 2012.

4.    With respect to the statement in the fourth paragraph of the transcript that “this is a huge market: 1.2 billion units sold per year,” one third party industry analyst report estimates worldwide mobile phone shipments exceeded 1.2 billion in 2008.

5.    With respect to the statements in the tenth paragraph of the transcript that the Palm Pre is “going to be a million times – well, not a million times – several times faster” than Apple, Inc.’s iPhone products and is “going to run rings around them on the web,” the Palm Pre is still under development and it is premature to state the speed at which the device accesses the web or the relative speed of the Palm Pre compared to the smartphone products of competitors.

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6.    With respect to the statements in the twelfth paragraph of the transcript that “there are aspects of the Pre that are unlike any phone you’ve every seen before,” “the Pre is the first one that is the next generation” and “the result is it does a lot of things the others guys don’t do,” the Palm Pre is designed to be the first phone based on the Palm webOS™ platform and as a result will have different operating characteristics and features than other phones, however; the Palm Pre is still under development and it is premature to compare its full functionality with that of other phones.

7.    The statements in the fourteenth paragraph of the transcript regarding the relative development and stability of Sprint’s, Verizon’s and AT&T’s 3G networks are generalizations regarding wireless cellular network performance that may or may not be true depending on a variety of factors specific to geographic regions .

8.    The statement in the second paragraph of the article that “not one” person who bought an Apple, Inc. iPhone on the first shipment date “will still be using an iPhone a month” after the two-year anniversary of that day is an exaggerated prediction of consumer behavior pattern and is withdrawn.

9.    With respect to the statements in the second to last paragraph of the article that “the underlying technology for Research In Motion Ltd.’s BlackBerry is about 13 years old, while the technology behind the iPhone goes back almost nine years,” estimating one specific age for the many technology components underlying any mobile phone is inherently imprecise and these statements are withdrawn.

10.    With respect to the implications in the second to last and last paragraphs of the article that Palm’s new operating system will give it an edge over competitors that “are going to run out of gas way before” Palm, estimations of the relative useful lifespan of smartphone operating systems are conjecture, unverifiable at this time, and age is not necessarily predictive of their relative long-term success.

Tagged as: iPhone, Palm, palm pre, Pre, roger mcnamee