Palm Says Pre Anticipation Hurting Sales

[SteveW]

Palm Says Pre Anticipation Hurting Sales

Palm said its third-quarter revenue will be lower than expected as the highly anticipated smartphone is sapping its Treo and Centro lineup.

By Marin Perez
InformationWeek
March 3, 2009 06:43 PM

Palm on Tuesday said its revenue for the third quarter will be lower than what the market expected because of waning demand.

Palm said its revenue will be in the range of $85 million to $90 million, well below the $150 million that Wall Street expected. The smartphone maker blamed the tough economic times, late shipments of the Treo Pro for Sprint (NYSE: S), and lower-than-expected sales of smartphones.

The decline in sales could be a self-inflicted wound, as many potential Treo owners may be waiting for the company's Pre smartphone. The touch-screen handset was unveiled to much fanfare at this year's Consumer Electronics Show, and the company is relying on it to take back market share from the likes of Apple's iPhone 3G andResearch In Motion (NSDQ: RIMM)'s BlackBerry line.

One of the appealing features of the Pre is webOS, which will be Palm's new operating system. The OS was designed from the ground up with Internet connectivity in mind, and it pulls in data from multiple Web services and aggregates it into a single finger-friendly interface. Palm said the platform was built on industry-standard technologies like CSS, XHTML, and JavaScript, which should make it simple to develop for.

"The much-anticipated launch of the Palm Pre remains on track for the first half of calendar year 2009, but as expected we've got a difficult transition period to work through," Palm CEO Ed Colligan said in a statement. "Despite the challenging market environment, the extraordinary respond to the Palm Pre and the new Palm webOS reaffirms our confidence in the growing smartphone market."

For the third quarter, the company said it expects the cash used in operations to be between $95 million and $100 million. Palm said it has between $215 million and $220 million in cash and cash equivalents, and it's eyeing raising some more money to drive the launch of the Pre and webOS.



SW

[SteveW]

I thought this was an odd article, since the headline isn't justified by the article itself. It says that Palm "blamed the tough economic times, late shipments of the Treo Pro for Sprint, and lower-than-expected sales of smartphones" and then goes on to speculate that the advance announcement of the Pre may also be hurting sales. Not what the headline says, at all.

Here's the original Press Release, so you can judge for yourselves.

Also, if the "difficult transition period" was "as expected", why are they missing financial expectations? I guess those Wall Street wizards are just too smart for me.

Finally, isn't "Pre Anticipation" redundant?


SW

[UFO]

As much as I love my Palm, I really don't think the Pre Anticipation is the big problem as much as the other factors the article listed. It's also true that the smartphone market gets tougher and tougher and everybody is coming out with newer, sleeker devices. More companies are also making smartphones now including apple. When Palm users go in to upgrade, they don't see a lot of improvements in newer Palm models compared to the phone they have, and they even look similar. So to many, it doesn't make sense to upgrade to another palm just because it's a little smaller. They either just keep their phone or get a phone made by somebody else. I don't think there's too many Palm fanatics just not upgrading because they know about and want the Pre.

The Palm Pre could help a lot, but the fact that it's only for Sprint means Palm will be missing a huge share of the market as at&t and Verizon Palm users will probably continue to switch to other devices rather than Sprint.

[larry]

I've already got to play around with the Pre. I think it will be a big hit for Sprint which they really need.

[SteveW]

Originally Posted by UFO As much as I love my Palm, I really don't think the Pre Anticipation is the big problem as much as the other factors the article listed... I don't think there's too many Palm fanatics just not upgrading because they know about and want the Pre....The Palm Pre could help a lot, but the fact that it's only for Sprint means Palm will be missing a huge share of the market as at&t and Verizon Palm users will probably continue to switch to other devices rather than Sprint.

Excellent points, which emphasize that the headline is misleading. Personally, I think that we'll look back on this five years from now and say "Yeah, the Pre - great device but it was released too late to save Palm."



SW
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[budney]

I think this device could turn Palm in the right direction regardless of carrier. But it's how they handle the development of software and hacking of the device that will decide Palm's future.

[SmArTeStChIlD421]

Originally Posted by UFO As much as I love my Palm, I really don't think the Pre Anticipation is the big problem as much as the other factors the article listed. It's also true that the smartphone market gets tougher and tougher and everybody is coming out with newer, sleeker devices. More companies are also making smartphones now including apple. When Palm users go in to upgrade, they don't see a lot of improvements in newer Palm models compared to the phone they have, and they even look similar. So to many, it doesn't make sense to upgrade to another palm just because it's a little smaller. They either just keep their phone or get a phone made by somebody else. I don't think there's too many Palm fanatics just not upgrading because they know about and want the Pre. The Palm Pre could help a lot, but the fact that it's only for Sprint means Palm will be missing a huge share of the market as at&t and Verizon Palm users will probably continue to switch to other devices rather than Sprint.

i think thats arguable because Sprin has been making a serious turnaround in advertising and in coverage.......i think Sprint does have a better chance of increasing subscriber base with this device....not to the degree that AT&T did with the iPhone but the same idea

[SteveW]

(Another article on this topic. Nothing regular WA readers don't know, more of a summary and update...)

For Palm, Some Tough Acts to Follow

Palm views the Pre, to be released by July 1, as the single smartphone for consumers’ work and entertainment lives.

By RANDALL STROSS
The New York Times
Published: March 21, 2009

COMEBACK stories are irresistibly appealing, in business as well as in sports. But recovering from some strategic mistakes is awfully hard. A case in point is Palm’s failure to anticipate the threat that Apple posed to its core business.

Nearly two years since Apple introduced the iPhone, Palm has yet to release the Pre, the successor to its aging Treo. Much is riding on the Pre, which the company says will available before July 1: sales of Palm’s older smartphones have collapsed.

Last Thursday, Palm reported smartphone revenue for the quarter ending Feb. 28 declined to $77.5 million, from $171 million the preceding quarter. Its net loss of $94.7 million was its seventh consecutive quarterly loss.

“The Pre is a bet-the-company product,” says Ken Dulaney, an analyst at Gartner.

A Palm spokeswoman said it is not the Pre, but Pre’s new operating system, WebOS, that is the bet-the-company offering. Palm plans to introduce additional products for WebOS, but has not announced any specifics.

Apple, meanwhile, has been bounding ahead. Last week, it previewed the third generation of iPhone software, which over all has attracted 50,000 companies and individuals who have registered as software developers. After only eight months, Apple’s App Store is stocked with more than 25,000 applications, the company says.

Palm was once in a similar position, boasting of an unmatched collection of third-party software in the 1990s, when the Palm Pilot brought computing power to the palm of one’s hand.

In the innovation race, Palm has fallen behind not just Apple but also others, like Google and Research In Motion, maker of the BlackBerry, that have introduced products or software in response to the iPhone.

When the Pre is ready, Palm has a lot of catching up to do in achieving sales that will attract software developers in large numbers. Last week, Apple said that it had sold 30 million devices running iPhone software.

In 2006, the year before Apple unveiled the iPhone, Ed Colligan, Palm’s chief executive, brushed aside the notion that Palm had anything to worry about from new entrants like Apple. “I would just caution people that think they’re going to walk in here,” he said.

“We’ve struggled for a few years here figuring out how to make a decent phone,” he added. “PC guys are not going to just knock this out.”

Apple, the novice, didn’t merely walk into the business. It climbed a 10-meter platform and executed a back two and a half somersaults with two and a half twists in the pike position.

Palm’s turn.


More...


SW