If The Pre Flops, Palm Goes Down With It

by Jason Wilk on March 22, 2009

palm-pre-all-in
  • Palm’s financial difficulties started looking worse this month as the company posted its sixth consecutive quarter of losses, with revenues for third-quarter 2009 falling to around $90 million. The stock has continued to stay high though as hype for the Palm Pre continues to rage through the market. Today however, people finally started asking the right questions, as eWeek posted their article on What if the Palm Pre Bombs? Everyone inside Palm from their CEO to their crazy investors have predicted the phone to be a legitimate contender to the iPhone, claiming its user experiencer rivals the top phones on the market.  Charles King, Pund-IT’s President and Principal Analyst came out and said today that 

If the smartphone (Palm Pre) doesn’t succeed, things will look truly dire for Palm. If it’s not game over, it’s down to the 2-minute warning with them needing to come up with two touchdowns from their own third-yard line. No matter how innovative the Pre, the device enters an economy in recession and a market crowded with other smartphones. Palm needs the Pre to be a blockbuster to show they deserve a place at the table when other companies have been delivering truly innovative products. People think Apple and iPhone are the product to beat, but the dominant player in the business market remains RIM and BlackBerry

  • In other words Palm may go bye-bye if the Pre is not a blockbuster success. Personally I think Palm stands a great chance to fail. First, they are putting a lot of weight behind a platform that allows third-party developers to create applications. Except for the iPhone, no one is seeing any real interest from mobile developers wanting to take time to develop applications for their users. This may have been something to get excited about 6 months ago when the Pre was announced, but not now. Second, for the Pre to be a big success, it’s crucial that it has a blockbuster launch. By only having Sprint/Nextel exclusively sell the phone, they are limiting themselves 90%, not to mention, the majority of mobile users (18-30), who are prime targets to buy this phone, don’t use Sprint/Nextel.  Third reason, Android. So long to the closed, one-off platform that is unique to each of the manufacturers (except Apple, but this goes for the standard computing game as well). Android will spread like a virus to almost 100 devices by 2010. Because it is open-source, we are already seeing companies tweaking it to have the same possibilities of the iPhone. Not to mention, if you are a developer, creating an app once, will get your app noticed by 100x more devices than just programming for the Pre. Even Apple is worried about Android (the Pre to Apple is like Cal State Northridge popping off to UNC that they are going to knock them out March Madness, it’s just noise). Lastly, let’s not forget where Palm came from. Before the Pre announcements, Palm bounced back from near the point of no return. Remember when not too long ago, their stock price was hovering around $1.00? They have had no positive fiscal news since, so if the Pre is a flop, what’s stopping it from diving below that price? Nothing. 

[Post to Twitter] 

Tagged as: fails, failure, palm pre

  • Augmented Reality
    The new wave of must-have apps will be centered around augmented reality.

    Augmented reality is achieved by using a device with a camera and a screen. Virtual images, text, video, and even 3D CGI are augmented onto the camera's view in the display, making the camera, display and augmented images a window into a virtual world within the real world. This is all in real time. No Photoshopping of still images.

    To make this a truly incredible real-life experience, however, you need an accelerometer, GPS and a magnetometer (digital compass). GPS knows your location and can find augmented info around you. The magnetometer knows which DIRECTION you're facing, to meaningfully place the info on your display, and the accelerometer knows the tilt of your device to adjust the on-screen info accordingly.

    The iPhone has GPS and an accelerometer. This summers update will include a magnetometer.

    The Pre does not have a magnetometer, making this kind of augmented reality experience impossible.
  • KenC
    On apps. The reason why there hasn't been a huge rush to build apps for handsets other than the iPhone is because the user base is not there yet. When the iPhone App Store launched, there were about 6M EDGE iPhones already out there, and probably around 4.5M iPod touches (hard to know exactly, as the only data point we have is that with 17M iPhones sold as of Xmas 08, there were 13M iPod touches sold). Extrapolating will get you 4.5M touches, for a total of 10.5M devices that a developer can write for when the iPhone AppStore launched. When the G1 launched there was an installed base of ZERO. When the Pre launches, there will be an installed base of ZERO. There's a big difference when comparing devices if one has a large installed base, ready to buy, to another with no installed base.

    Not only that, but Apple already has most of that installed base already registered with One-Click purchasing because of its iTunes Music Store.

    Google's app store opened with no revenues other than embedded ads, possible to generate revs for developers. Also, Google's payment system is more laborious than the One-Click Amazon system that Apple uses. Palm will have the same hurdle that Google had.

    On networks. Sure, exclusive release on Sprint is tough, 50M customers and falling, compared to 80M at ATT and Verizon. But they don't have a choice.

    On Android, there already is an OS that's on a plethora of devices including Palm's and that's WinMo. If anything, Android will displace WinMo, except where MS buys placement, that they recently did with LG. Android also has an open-source competitor that already exists on the vast majority of smartphones, Symbian. Symbian is used by Nokia, SonyEricsson and others. It's taken a long time to get more than one Android phone into the market, let alone 100. And, even if Andoid were to get 100 different handsets then you run into the issue of device fragmentation. Are developers really that excited about designing apps, for the lowest common denominator so it can run on different size screens, different ARM processors, different input methods, different screen technologies, different accelerometers, etc. Isn't this what happens to all those WinMo devices?

    Lastly, you don't address the networks. There's a reason why Android devices haven't shown up yet on the top networks. Android will run around the value-added services that networks like, just like the iPhone does on AT&T. Sure, T-Mo has gone for it, because they need a homerun. But, the big carriers like AT&T and Verizon, particularly Verizon will wait as long as possible. Only if Android phones on other carriers start to steal their customers will they finally relent.

    Honestly, I had high hopes for Android, and I've been a little surprised at the slow release of handsets, the slow release of apps, and the slow uptake by networks.

    Disclosure: I am long Apple, Google and Palm.
  • Without researching raw numbers, I'm still sticking with my 'T-Mobile doesn't have that many subscribers' line. Sprint has like 75% more subscribers, and VZW and AT&T have WAY more, probably triple the subscriber base. And if the G1 accounts for 20% of sales, that would mean the actual number of G1 sales should be pretty low, comparatively. If only because T-Mobile doesn't really advertise for it.

    I get what you're saying about the 'build the base and the devs will come' but with something like the Pre, which has crazy hype, and not to mention already has a TON of devs on board, I think we'll see a lot of apps either on launch or very shortly thereafter.

    Ironically, in my rush to write this I did in fact miss another carrier that has signed onto Android. Sprint. And though I think Sprint will push an Android equipped phone, I doubt they'd push it anywhere near what they'll put into the Pre. VZW/AT&T are LinMo, I believe. (Of course. Why wouldn't they just all sign up for the one new cell phone initiative that seems to have any interest when they could just splinter up into rival factions so nothing gets done.)

    That's basically my call and response to your call and response. I just think that the Pre has a ton more potential. It seems to be the complete package. I mean, the G1 is awesome because it has the whole open source thing, not to mention the Google backing. But on the other hand, it's freaking ugly as hell. And the new one they unveiled doesn't really look that much better. And as much as I hate to admit, people love a pretty device. Functional, sure. But it needs to be pretty. Personally I just want one that does everything I want in a moderately small package. But that's me.
  • Jason Wilk
    Bates: My comments follow yours in parenthesis. I don't totally disagree with you.

    "And Android, as it stands, hasn’t been adopted by any other carrier in the US" (Not yet, 100 devices by 2010).

    "The iPhone will obviously have a ton of apps because the iPhone has a huge base of buyers" (The G1 already makes up for 20% of T-mobile sales. I'd hardly say it doersn't have a big base of buyers).

    "They’ve said if you know HTML, CSS, and Javascript, you can write apps for the phone" (I agree with you that this is easier than writing Objective C, but at the end of they day, the amount/potential of the userbase will make the difference, not what developers have an easier time with. Let's be honest)

    "Currently only T-Mobile has signed up to support Android, so even if they launch a hundred phones this year, Tmob will be the only one carrying them" (this is straight up not true, Android is not exclusive to T-mobile by any means).

    "They are also going to allow Palm to have their own app store, which if history shows anything, it’s that Verizon doesn’t like that kind of thing." (agreed, carriers love the locked deck, it makes them more money when they control it)
  • I have to nearly fully disagree with you here. As far as the apps thing goes, the G1 isn't getting a ton of apps because not that many people have one. First it's on T-Mobile, which realistically isn't a very good network. It has spotty coverage outside of major metropolitan areas, and their 3G network is basically nonexistent. And Android, as it stands, hasn't been adopted by any other carrier in the US. And as much as I love to think they'd all emrace the whole open source thing, I don't see it happening. AT&T has the iPhone and Sprint has the Pre. Neither of these companies might be too willing to embrace another 'superphone', and Verizon doesn't like their customers to have anything they don't personally approve and generally sell to you.

    The iPhone will obviously have a ton of apps because the iPhone has a huge base of buyers, so developers are willing to write apps that are compatible with it. And while devs could in theory make apps for the G1, it doesn't use Java standards, so it requires devs to basically re-write the programs. The Pre doesn't use anything special as far as programming languages go. They've said if you know HTML, CSS, and Javascript, you can write apps for the phone. Basically every programmer knows all three of those. And I think that will be the key. It's easy for devs to write the apps since it doesn't require them to learn anything new. Even if the user base isn't very large, it requires a minimal effort to write apps for the phone.

    As for the 'limiting themselves to Sprint's user base,' what about AT&T with the iPhone. I realize Sprint has fewer subscribers than either AT&T or Verizon, but their numbers aren't THAT bad. Currently only T-Mobile has signed up to support Android, so even if they launch a hundred phones this year, Tmob will be the only one carrying them. I think them being on Sprint, as compared to Verizon (realistically the only other option - AT&T wouldn't take the Pre when they've got the iPhone) is a genius move. Even if Sprint is a lagging company, Verizon SURELY wouldn't give Palm the freedom they need to let their phone sell. Sprint is offering a terribly cheap pricing rate for the Pre, WAY less than VZW would have, surely. They are also going to allow Palm to have their own app store, which if history shows anything, it's that Verizon doesn't like that kind of thing.

    Sure, the Pre could flop, but if the reviews have anything to show, it's not going to flop. Already it shows more promise than any other phone out there, besides maybe the iPhone, and the demo models were running beta (maybe even alpha) software. And WebOS is definitely a step in the right direction, which all their phones will now be running. It seems to be better than any other OS out there, and it isn't as limited or locked down as OS X is for the iPhone.
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