Treo 2006 Product Pipeline Update

Two weeks ago in my post “Treo Family: More Babies Due in 2006?” I provided information based on an analyst report about the forthcoming Treo 700w running Windows Mobile, Treo 700p running PalmOS as well as two new mysteriously codenamed “Hollywood” and “Lowrider” Treo smartphones – the first being a high-end model and the second a mid-market one priced in the $200 to $300 range.

A recent investment report by Sagio Investments, one of the largest Palm shareholders, covers Palm’s current business strategy and more importantly provides more details on future Treo releases for 2006 below.

• January 2006: Treo 700w (WM 5.0, ED-VO) exclusively from Verizon
• January 2006: Treo 700p (Palm OS) exclusively from Sprint
• March-May 2006: "Hollywood" - a fancier 3G/GSM smartphone without external antenna to appeal to European customers; in US likely to be launched by Cingular
• March-May 2006: "Lowrider" - a sub-$300 device and entry-level PDA, compatible to previous-generation network radios

Specifically the report also states that “We know that PALM will introduce four new models in CY 06. In January they will introduce the already announced Treo 700 Windows which will be a Verizon exclusivity it will be the first EV-DO Treo on the market. Around the same time we believe PALM will launch a Treo 700p running PALM OS on the Sprint network, both devices will keep same form factor and will capitalize on the Treo strong foothold in the US enterprise Market.”

This is the first rumour that I have come across from a reputable source which points out that both new forthcoming Treo 700 models will keep the same form factor (below) with the only difference being the operating system which will be Windows Mobile on the first and PalmOS on the second and the differently labeled navigation buttons.

The other interesting thing is that the Treo codenamed “Hollywood” rumoured to have no external antenna (an absolute must for the European market because of design sensibilities) and also to be slimmer than our current Treo 650 (see below) appears to be aimed exclusively at the GSM market (with Cingular in the US market and probably Orange in the European one) and will finally also support 3G high-speed data connectivity.  An educated guess is that this model will be priced higher than our Treo 650 in the $700 to $800 (which I will more than happily pay when it becomes available because I have been yearning for an antenna-less Treo for some time).

Overall, it looks like each of the large US wireless carriers have placed their ‘Treo bets’ as will each have their own ‘signature’ Treo smartphone for an exclusive period of up to six months in 2006.  Verizon will have the CDMA 700w running Windows Mobile while Sprint will have the CDMA 700p running PalmOS and finally Cingular will have the new GSM Treo “Hollywood”.  Meanwhile, the mid-market Treo “Lowrider” may become a model that all carriers take on board to appeal to a wider market.

Separately, on the business side of things, highlights of Sagio’s investment research report include:

• Smartphones represented 67% of revenues in 1Q06, growing 167% yoy. Palm also picked up market share in the US with 31% of the market second only to RIMM (55%). PALM had 11% of worldwide market share behind both RIMM (22%) and NOKIA (17%).
• Palm's handheld market-share in the US is 61%
• According to industry report the market for data enabled devices (Treo and Blackberry line) will grow tenfold by 2008 passing from an estimated 4 million devices to an estimated 40 million
• Push Email is the first real killer-app for Smartphones and compares it to the introduction on of spreadsheets and Word for PC.
• Palm has a competitive advantage because it can run the most Push email systems on the market
• Palm has a very high chance to ship over 2.5 million Smartphones in fiscal 2006
• They conclude that Palm's stock valuation is currently "cheap" and compare it's price to Apple Computer's before the company introduced the iPod line
• Based on their valuation model, P/E is below 10
• PDA business is still very profitable and Palm is gaining market share
• Palm has innovation edge -> first hdd-based PDA (LifeDrive)
• Palm has a "quasi monopoly" on Palm OS handhelds
• Palm is closing in on smartphone business only behind RIM and Nokia
• Palm is growing faster than the overall market
• Treo 650 is leading smartphone today
• Demand for "data enabled devices" will grow tenfold by 2008
• Microsoft-Palm "Treo 700" deal will help Palm to gain market share in Europe
• Push e-mail technology may soon become available to Palm
• Palm has a promising product pipeline
• Analysts are wrong, because of: incorrect estimates on Treo sales, wrong margin estimates

Palm is cheap, says investor [MobileRead]
Treo 700p, Hollywood, Lowrider Treos Coming Next Year [Palm Infocenter]

Note: if someone has a copy of the original Sagio PDF report which is no longer available online could you please email it to me at treonauts[at]pobox.com. Thanks!

Treonauts cannot wait for 2006 to arrive…