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Taking Back the Market

Palm Prē: Cutting Off Business Customers

Tim Nash - 2009.10.05

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The Pre coulda been a contender. Palm's low capital and cash burn meant that even getting it to the starting line would take a great feat by Jon Rubinstein's team. On top of that, making the Pre successful would take near perfect marketing.

Unfortunately, Palm has taken to the Roger McNamee approach to marketing: Burning bridges brings plenty of publicity. From his March 5 interview, "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."

Remarks like these had to be heavily qualified in an SEC submission so the first 2009 share issue could be successful.

A Risky Choice

Using Apple's USB Vendor ID so that Pre's media sync works with the current version of iTunes may have been useful for publicity, but it has cut off the business sector as a source of sales. When the decision by the USB Implementers Forum went against Palm, the alternative media sync should have been rolled out.

Corporates don't look on this kind of behaviour as being clever. Corporates buy standards. If they didn't, IBM and Microsoft would have been in difficulty long ago.

IT departments always find objections to supporting a new platform because it's more work for them, so one of the jobs of marketing is to show the Pre isn't a risky choice. Using Apple's VID raises questions in corporate minds of what other shortcuts Palm have taken, what else hasn't it done right?

This leads to the obvious thought: Why support the Pre?

BlackBerry Gets It

Now compare the RIM approach. BlackBerry Media Sync uses the documented XML file provided in iTunes, which is supported by Apple. Maybe this is slightly less convenient for the user than the Pre approach, but IT doesn't care.

Supporting music and media synching from iTunes is something IT doesn't want to bother with. It doesn't want the IT Support Desk fielding questions from users asking why they can no longer load music, etc., on to their IT supplied Pre. So IT will push BlackBerry every time, even if it doesn't yet have a great browser, and when there's a need for an alternative, there's always that up-and-coming iPhone.

Sticking It to Palm/Treo Users

So all those businesses that bought Palm Pilots and then moved to Treos - and all the managers and businessman who paid for them out of their own pockets - are lost as customers. For Palm to cut itself off from this major user base where there is no recognised Number 2 (Microsoft's Windows Mobile is uncompetitive, Nokia is nowhere in the US, and the iPhone's success in business is limited) is an act of complete stupidity.

Prices Slashed to Move Inventory

Pre sales are already suffering. Amazon started discounting to $99 and Walmart to $79 less than 100 days after launch. If the 11 weeks of Pre channel inventory found by Gerard Hallaren (TownHall Investment Research), is anywhere near correct, Palm has run out of early adopters. That Palm even found 375,000 up to the end of August is a testament to the Pre and the lack of competitive offerings by Sprint.

Crossing the chasm from the early adopters to the mainstream is always difficult, and Palm has blown its best opportunity.

There is still the prediction of going cash flow positive in December to sustain Palm shares. The orders from O2 and Movistar in Europe may be enough to make that happen. If so, it will be a blip in the descent to Chapter 7 or 11.

The latest successful share issue will let Palm limp along for a while longer and put out more press releases to add to the suicide note, but bankruptcy court is an easy prediction for 2010. LEM

Palm Pre Chronicles:

  • Palm Pre: Chronicle of a death foretold, 2009.03.10. Palm is betting the company on Pre and running out of cash. Can Palm survive in the face of the iPhone, BlackBerry, and Android?
  • Palm Pre: Chronicle of a death foretold, part 2, 2009.06.18. The Pre has had launch problems, production problems, and needs to carve a niche against established competitors. Don't hold your breath.

    • Tim Nash lives with his wife, her website on the area ariege.com, two daughters, a cat, and a dog in the French Pyrenees. He has worked for computer companies for more years than he cares to remember, lapsed for a while after the Apple II, but became a Mac fan when his wife introduced him to the IIsi. If you find his articles helpful, please consider making a donation to his tip jar.

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