Barron's Says Palm is Down but Not Out

Barron's has posted a new piece of tech commentary entitled, "Palm Is Down but Not Out". The article, limited on Barron’s web site for subscribers only, is dated December 8th and focuses on the immediate aftermath of Palm’s pre-notification of losses for the last quarter. A full text mirror of the article is available here.

The myriad of bad news facing Palm, Inc. rests predominantly on the shoulders of a previously unspecified device's failure to pass Verizon's stringent testing and certification process. The Barron's article confirms the suspicions of the PIC faithful as the device in question being the ill-fated Verizon Treo 755p, a handset whose Verizon debut has been constantly rumored since prior to the device's Sprint launch back in May.

Verizon Treo 755pAfter a series of delays and no-shows, only recently has VZW made any official notification of the 755p's existence. After the enormous debacle that was the Treo 700p's buggy release and seemingly endless wait for a ROM fix that was later recalled and then reissued, Verizon is likely understandably worried about the 755p, which shares many architectural and OS similarities with the fatally flawed, now-discontinued 700p.

The article goes on to give a glimmer of optimistic news for Palm with the usual commentary on the new talent infusion from ex-Apple gurus Jon Rubinstein and Fred Anderson will spearhead Elevation Partners’ efforts to revitalize Palm. Additionally, Barron's indicates that shipments of Windows-Mobile-powered Treos (especially to users overseas, though no specific mention is made of the non-US Treo 500v) are growing at a reasonable clip commensurate to other manufacturers' WM-based smartphones.

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twrock @ 12/11/2007 12:25:32 AM # Q
Palm has never done anything right, isn't doing anything right, and will never do anything right.

(Thought I'd take care of that early on in the comments on this article so that "everyone" else doesn't have to bother posting it.)

"twrock is infamous around these parts"
(from my profile over at Brighthand due to my negative 62 rep points rating)

RE: Bah...
pmjoe @ 12/11/2007 6:18:07 AM # Q
Actually, I was going to say the PIC article is a bit too critical of Palm. If all these issues are related to Verizon, did one ever stop to think it may be Verizon's insistence on crippling phones that is forcing these delays. Certainly leaves me skeptical of Verizon's recent press touting plans to open their network up to "any" device.

Then again, if Palm wasn't still using Frankengarnet 5 years past its end-of-life ... well, they probably wouldn't have these issues.

Anyhow, the Centro seems to be doing better than some of us, including myself, predicted. So Palm may be "down", but they're hanging in there. Palm's two biggest mistakes:
1. Using Garnet well past its designed end-of-life.
2. Not developing a "competitive" alternative to the iPod culture.

RE: Bah...humbug
SeldomVisitor @ 12/11/2007 6:40:31 AM # Q
What does this mean:

== "...shipments of Palm's Windows Mobile smartphones-meaning those using
== the Windows Mobile operating system rather than Palm's own-have grown
== faster than total Windows Mobile shipments in the past two quarters..."

That's right - exactly nothing. (and if you REALLY need to have explained how that could be a sign of REALLY bad things for PALM instead of what the "article" tries to portray you need to go back to elementary multi-variate algebra class)

And do you like this repeated falsehood:

== "...private-equity shop that in October injected $325 million into
== the company..."

They changed the wording from "cash infusion" at least, but the words of course mean the same.

And are false.

Fact - PALM went from ZERO debt and =$600+ million= in cash BEFORE the transaction to =$400 million= in debt and maybe $200 million in cash AFTER the transaction.

Does that qualify as having been injected with cash? Or as a "cash infusion"?

Be careful about the Me-Too Media - they OFTEN get it WAY wrong and they OFTEN reprint what other Me-Too Media outlets have gotten WAY wrong (ya getting the idea why it's got the name "Me-Too Media"?...

RE: Bah...
palm_watcher @ 12/11/2007 7:39:32 AM # Q
'What does this mean:

== "...shipments of Palm's Windows Mobile smartphones-meaning those using
== the Windows Mobile operating system rather than Palm's own-have grown
== faster than total Windows Mobile shipments in the past two quarters..." '

It means that Palm's WinMob device sales growth % is greater than the total growth % for all WinMob devices on the market. I.E, they are gaining market share within the WinMob space.

RE: Bah...
SeldomVisitor @ 12/11/2007 8:09:14 AM # Q

It means PALM's self-referential sales growth with Windows devices is greater than the Windows device growth in the Market as a whole. Nothing more than that.

For example, if PALM sold =1= Windows device last quarter and =2= this quarter, they have 100% growth in sales of Windows devices. We can assume the quarter-to-quarter growth of Windows devices for the Market as a whole is less than 100%, right?


This book:


is essential reading for ANYONE who is going to pay ANY attention to ANY statistics about ANYTHING.

WM slowly taking over...
Surur @ 12/11/2007 9:36:18 AM # Q
]Morgan Keegan analyst Tavis McCourt reported that shipments of Palm's Windows Mobile smartphones-meaning those using the Windows Mobile operating system rather than Palm's own-have grown faster than total Windows Mobile shipments in the past two quarters.


In a Thursday client note, Morgan Keegan analyst Tavis McCourt said that data from market research company Gartner Inc. shows Palm growing slower than the overall smart phone industry, but predicted that growth of Palm products using the Windows Mobile operating system "will surprise an investment company that appears to have largely written off the Palm Treo."

Lets apply some figures to that. The Smartphone market is growing at about 30% per annum, and WM is growing at about the same pace. If WM has been around 50% of Palm's sales for 2 quarters now, and growing faster than 30%, and yet Palm is growing slower than the market, it must mean WM is now bigger than 50% of Palm sales and that POS growth is more or less stagnant.

E.g. is Palm's WM Treo's grow 12% per quarter,for sales growth of 40% per year, while Palm's sales growth in total is 6% per quarter, for a total sales growth of 20% per year (borne out by figures from the last 2 years) this would mean this quarter Palm would sell 470 000 WM Treo's and 372 000 POS Treo's, which is less POS Treo's than they sold 2 quarters ago. That would make WM 55% of the mix and POS only 45%.

The slow progression of market share loss which occurred external to Palm, when WM slowly took over, is occurring now internally in Palm.

Pity their level of commitment to their cash cow is so low, and they continue wasting their time on Linux dreams. I'm sure this hurts their ability to sell their WM devices.

RE: Bah...
hkklife @ 12/11/2007 9:43:19 AM # Q

Quite contrary to their dumbphones, Verizon DOES NOT cripple their smartphones. I'd even go out on a limb and say that it would be more trouble/cost than it was worth for Palm to try and get Palm to hack up Garnet more for their own customizations.

Verizon's POS Treos, in particular, if we use the 700p as the example here, have less junk/clutter in ROM than their Sprint brethren. Heck, the VZW 700p isn't saddled with lame junk (NFL, SprinTV ROM etc) and even VersaMail must be loaded from the bundled CD. If the Sprint bloatware-laden Centro and 755p are any indication, if Verizon ever gets the 755p to market, we should expect a similarly bare-bones configuration and that's actually the way I like it.

Pilot 1000-->Pilot 5000-->PalmPilot Pro-->IIIe-->Vx-->m505-->T|T-->T|T2-->T|C-->T|T3-->T|T5-->TX-->Treo 700P

RE: Bah...
mikecane @ 12/11/2007 10:04:21 AM # Q
>>>If all these issues are related to Verizon, did one ever stop to think it may be Verizon's insistence on crippling phones that is forcing these delays.

Did it ever occur to anyone that maybe Verizon is sick to death of people coming back to their stores to complain about their lousy Treos? And having to tell them -- their customers -- to go whine to Palm?

RE: Bah...
mikecane @ 12/11/2007 10:06:21 AM # Q
And another thing: Maybe Verizon has gotten *so* sick that they've had people reading the Net to see what all the problems have been, have been *testing specifically for those problems,* and then *finding them again* and then telling Palm there is no way in hell they will shill yet another shoddy product?

It could well be Verizon is saving people grief!

(Look at how low Palm has sunk -- it's gotten *me* to defend a frikkin *cellphone carrier*!)

RE: Bah...
mikecane @ 12/11/2007 12:16:41 PM # Q
Hey, how would you have liked to have wasted your money on this turkey?

Toshiba Say 'Hard Luck' to Buyers of $800 Mobile Cell Phone

RE: Bah...
pmjoe @ 12/11/2007 1:35:14 PM # Q
So does Sprint just let their phones be buggy then?

RE: Bah...
Kinch @ 12/11/2007 1:59:43 PM # Q
YES ... in my personal experience Sprint gladly sells phones that don't work. We had Sprint as a cell carrier for many years. Eavery time we wanted/needed new phones, we usually had to try 3 or 4 different phones to find one that worked. The sales people didn't seem at all surpriased when we returned phones complaining they didn't work ...
RE: Bah...
hkklife @ 12/11/2007 2:06:12 PM # Q

To be perfectly frank here:

Yes, Sprint (TO A CERTAIN EXTENT) is much more forgiving then Verizon when it comes to launching handsets (at least Palm's offerings) with known "issues".

Case in point:

-The Handspring Treo 600 launched on Sprint, what, 8-9 months before the refreshed Palm version hit Verizon. Yes, everyone complained bitterly. But the VZW version did ship with a newer ROM and with all of the initial kinks worked out that the cash-stricken Handspring couldn't quite resolve.

-The Treo 650 launched with Sprint in October '04. Verizon didn't get it until May of '05, long after the hideous intitial NVFS bugs had been squashed.

-Palm & Sprint launched the 700p simultaneously in June '06 and we KNOW how that turned out.

So you really cannot blame Verizon for being hesitatant on the 755p after being burned so badly on the 700p debacle. Remember, YOU AND I are no longer Palm's true customers. It's the carrier that are their new bread & butter. And years of biotching and free constructive criticism/free market research on sites like PIC, TC & BH don't make one whit of difference. But, having Palm's quarterly earnings devastated because of Verizon saying that it doesn't pass muster (don't be surprised if the VZW 755p ends up being cancelled entirely) is certain to make Palm wake up and smell the coffee. Just look at the Centro--under the hood, it's superior in every way to the pricier 755p and 700p. Had Palm just gotten their act together enough to put the Centro's innards in the 755p FF they'd actually have had a semi-compelling smartphone, even if it does run Garnet.

As I've long said, Access' Garnet OS unto itself is only part of the problem. It's Palm's poor hardware choices, pitiful quality control & testing, and their implementation/hacking of Garnet that leads to the big problems.

Pilot 1000-->Pilot 5000-->PalmPilot Pro-->IIIe-->Vx-->m505-->T|T-->T|T2-->T|C-->T|T3-->T|T5-->TX-->Treo 700P

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Words to Remember

mikecane @ 12/11/2007 10:12:11 AM # Q
From that article:

"The shareholders voted to support management's strategy to invest in products and operational expertise so that Palm could participate fully in the growth opportunity of smartphones," McNamee says.

"You won't even see it in the numbers for awhile, but the company is off to a great start," he adds.

Reply to this comment

Sad enough to make you cry

Tuckermaclain @ 12/11/2007 11:27:54 AM # Q
All the potential the slick little organizer held. All that Palm has not done. They could still get some inspiration for their line if they would look at some of the constructive criticism found at this web site. Who hijacked the dynamic little company that could and turned it into, well, nothing?

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