Palm & Treo: Everyone Wants A Slice

Great post again, Andrew. I don't understand why there are so many palm bashers out there. I agree with you and the latest Jeff Hawkins Interview on palmaddicts in which he proclaimed that palm is in its best shape in a long, long time.

I, like you, want Palm to stay independent and look forward to many, many more years of innovations.

Oh, one more thing, bring on the iPhone and the competition!

I have been a staunch Palm supporter and user since 1999 or so. I have been "somewhat" disappointed in the lack of OS development, but still find the simplicity of Palm as opposed to the buggy and complex WM OS to be suitable for my needs. To ignore reality though is silly. There have been numerous reports - from reliable quarters - that Palm is indeed on the chopping block. The sale of it just MIGHT be a favorable thing; maybe the new owners would do something to bring Palm back to the market share it once enjoyed.

David

Based on this article in yesterday's WSJ, Palm is moving forward with plans to look at strategic options, code for: The business is up for sale.

Palm said to hire banker, explore sale
Wireless-device maker hurt by the competition
Jeffry Bartash, MarketWatch
Last Update: 9:54 AM ET Mar 5, 2007

WASHINGTON (MarketWatch) -- Palm Inc. has reportedly hired an investment banker to help the wireless-device maker explore a potential sale.
The Wall Street Journal reported Monday that Palm is working with Morgan Stanley to evaluate its options, citing "people familiar with the matter." Possibilities could include a sale to Finnish mobile giant Nokia Corp. or a private-equity firm.

http://tinyurl.com/37xn6h

[Editor Note: Please do not copy/paste full copyrighted articles here but instead link to the source.]

Well stated Andrew. I too am continually puzzled at the intimation that Palm is dying, already dead, or irrelevant. I see as many, if not more, Treos in use in my daily life than any other device except perhaps the combined number of Blackberry units and many of the people I see using a Blackberry also carry a second phone - especially those using the older "soap bar" units.

A strong, independent Palm is in our (the users) and the industry's best interests. This is not a company that needs "saving" by being acquired by a troubled company looking for buy into the smartphone market.

Interesting article, Andrew, but I disagree with you about the Apple iPhone. I saw the demo at Macworld Expo and while version 1.0 will lack some features I want, ultimately it's a much more logical and user-friendly experience than the Treo. I think you're so immersed in the "smartphone" culture that you're forgetting how technically inept most consumers are. I know many highly-intelligent but impatient people who have no willingness to read the Treo owners manual let alone all the supplemental stuff one must master to make it truly functional. The Treo is far, far too hard to use. The iPhone isn't perfect but trust me, a huge number of consumers will be won over by the intuitive operating system. I too wish Palm well but at this point that means introducing a next generation smart phone with a far more intelligent design.

I think this post betrays a misunderstanding of the issues involved in selling a publicly traded company. The CEO does not get to decide whether the business gets sold; the stockholders do. If more of them vote for a sale than for keeping the status quo, then the company gets sold. Period. The officers and directors have a legal duty to the shareholders to maximize shareholder value -- not to say "NO AND GET THE HELL OUT OF MY OFFICE" to anyone who may want to buy.

The rest of your post goes on to list all the things that are wonderful about Palm; which are all excellent reasons why someone would want to buy it:

"Additionally, with a large cash position of $500 million, cash-flows of $120 million in the past 12 months, a well-known and trusted brand, its expanding portfolio of Treo smartphones running both the PalmOS and Windows Mobile, the recently purchased perpetual PalmOS license, a new operating system rumoured to be in the works, its growing worldwide carrier relationships (such as its new cooperation launching the Treo 680 with China Mobile – the world’s largest mobile operator with more than 240 million subscribers – announced today), the secret product code-named “Sherlock” that founder Jeff Hawkins is said to be working on as well as the many new Treo smartphones and carriers due to be announced in the coming months Palm is certainly a very attractive successful company."

Assuming even half of that is correct, and assuming Nokia and Moto are struggling as you say, they would be complete morons not to think about acquiring a successful brand like Palm. And if they offer a substantial premium on the share price, chances are the company will get sold. The fact that the CEO says the company "is not for sale" means nothing in the real world. If the stockholders decide to sell, that's it.

dsilver & Vito - reports are already coming out today that Palm acquisition rumours were unfounded...

http://tinyurl.com/2pss4y

Arthur - as I stated in my two iPhone posts I believe that it will be successful but not in a way that will materially affect the continued Treo growth. As you point out Palm may indeed very well also launch an entirely new product which will further change the dynamic.

Cheers, A.

Andrew, I agree with you 100%. I have had the model 600, 650 (still have two of those) and now the 680 and have used them on Sprint, Verizon and Cingular. I even convinced my employer to go with the Treo (on Verizon) instead of the Blackberry and we love them!! I'm not sure if I would consider myself a "power user" but I do a lot on my devices and have convinced my wife, who is not a gadget person to use one and now she won't leave home with out it. No smartphone is perfect and the Palm devices certainly are not. I have always believed that if it works for you that is all that really matters. I await Palm's next innovation.

Palm is dying.

Get ready for a world with no Palm.

Here's a little perspective...

Palm's sold 5 million Treos?

Apple's sold 90 million iPods - 21 million in the last quarter alone.

Palm has "a large cash position of $500 million"?

Apple is sitting on cash reserves of $10 BILLION.

Palm should be afraid. Very, very afraid.

And that's GOOD - because fear/survival is a powerful motivator, and hopefully will get Palm up off its ass. They need to start making _revolutionary_ products again, not merely _evolutionary_ ones. (I love my Treo 680, but it is basically just an improved 600.)

Oh, and btw? Just because a CEO says his company isn't for sale doesn't mean his company isn't actually for sale. He may simply be posturing, or playing hard to get. And more importantly, as a previous poster pointed out, it's not necessarily even up to the CEO to decide whether or not his company is or isn't for sale in the first place.

(And no, I'm not suggesting that Apple will or should by Palm - that's laughably silly - just that from a market perspective, Apple could eat Palm's lunch with a mere nibble.)

Palm's mismanagement has resulted in the company's technological stagnation, locked into an antique operating system and no resources to invest to catch up with the train that has left Palm behind.

Andrew, take solace in the fact that all of the good things you like about the Treo will be eclipsed by the new Apple iPhone that you will fall in love with.

The facts are that Palm is in dire financial straits, and no one thinks that there is any value to investing or acquiring anything to do with the company or its meager assets.

READ:

Report: Palm discussing strategic options with bankers
By Sumner Lemon, IDG News Service

Smartphone maker Palm is consulting with investment bankers on its strategic options, including the prospect of selling the company, seeking investment from venture capitalists, or making an acquisition of its own, according to a report in the The Wall Street Journal.

Beset with growing competition in the smartphone market, Palm is discussing a range of options with bankers at Morgan Stanley, the newspaper reported, citing unnamed sources familiar with the discussions. Widespread speculation that Palm is likely to be acquired by another company sent the company’s shares higher last week, rising nearly 13 percent during the week to close at US$18.30 last Friday.

A Palm spokeswoman in Singapore could not immediately be reached for comment on the report.

Palm, which sells the popular Treo smartphone, has a loyal customer base but the company faces increasingly tough competition from a range of competitors, such as BlackBerry-maker Research In Motion (RIM) and Taiwan’s High Tech Computer Corp. (HTC), the world’s largest maker of Windows Mobile handsets. HTC sells some of those handsets under its own brands, but most are made under contract for handset vendors and operators, which sell them under their own brands — often competing head-to-head against the Treo.

Analysts last week said a private sale could help Palm, shielding the company from quarterly scrutiny of its numbers and freeing up the company’s management to make acquisitions necessary to boost the technology used in its smartphones.

http://www.macworld.com/news/2007/03/05/palm/index.php

Facts:

1. Windows Mobile devices have spent the last five years evolving to no longer be completely unusable.

2. Palm OS based devices have not improved significantly in the same time.

3. Palm's Windows Mobile devices are significantly more expensive, and not significantly differentiated from other vendors' offerings.

Draw your own conclusions.

I have been a Treo disciple since it was a module hanging out the back of my Handspring Visor. I will miss the scores of Palm OS applications I have purchased. But I have accepted that the 680 will probably be my last Palm device.

I cannot bring myself to pay a fourth time from the Treo 600 (600, 650, 680) and Palm does not seem able to produce something better. Hopefully before this device dies, they will prove me wrong.

Hey getaclue - who's paying you to repeat the same "hype" that Andrew addresses in his article and that Jeff Hawkins (whose point of view I trust more than anonymous financial pundits) directly addressed in the Palmaddict interview. You sound like a Symbian, WinMob or iPhone enthusiast who is waiting and hoping with baited breath for Palm to fail.

Ultimately, time will tell about Palm. While speculation is fun, its ultimately pointless for the end users (most of us). Truthfully, I'm interested in seeing how it all plays out for Palm in the long run. They've turned ashes into diamonds more than once. If they pull it off again, how cool would that be?

i have never seen a Treo in Holland (europe). So Palm had some work to do....

I dont think they will succed with Palm os, much too late. The Treo 750 has a better chance. On drawback...all the people who see my phone ask my why it is soooo big, hehehe. Work to do for Palm!

Btw I dont think owing an old os is something to be happy about for the future...

I can certainly agree with you regarding the commentary regarding Palm's "dead OS". I love my Treo 650 (CDMA, VZN) and I feel it is significantly better than WM5 at certain tasks - out of the box at least. Unfortunate for me, my Treo fell to the gorund one too many times this weekend causing it to split open thus I activated my Moto Q. I am using the Q for a cuple months longer until my contract allows me to either walk away and go to a GSM carried (e.g. for the Treo 750 or iPhone) or upgrade to a CDMA Treo such as the 700p or posisbly 700wx as the pocket pc edition is light years better than smartphone on the Q.

So, I am bullish on Palm and the future of the Treo. General form and function is outstanding. My wish list is simply, make it a bit thinner with equivalent battery life - That would make me very happy and not a major deviation form their current design philosophy. That, eithe rusing a new Palm OS or WM6 should afford signigicant competitive advantage moving forward as Palm increases it global presence.

Remember all the pundits who went around for years proclaiming that "Apple is dead!" Finally, that got so ridiculous that no one would pay attention to them anymore. I wonder if those are the same pundits who are now proclaiming the death of Palm.

Of course, it would help if Palm had a Steve Jobs in the wings who could breath some buzz back into Palm.

Palm/Treo badly needs a fresh update for the new buyers. Treo is starting to loose the competitive edge.

All Treo's are still lacking the one feature that nearly kept me from getting one in the first place - WiFi. DUN doesn't cut it inside secure/private networks. No other feature will bring out the new Treo buyer in me. Not RAM, not bluetooth updates, not faster provider based networking, not warmed over style & form factor mods, and certainly not a camera upgrade. Give me unrestricted 802.11! It's what's needed for everyday use.

If Palm doesn't want to be eventually overcome by competitors and perhaps bought out, they need some real innovation! Not what I've been seeing since the 600 came out.

I'll probably keep my Treo for another couple of years until the first WiFi model comes along that works on my service provider, if not I will likely find something better at that time. Sad statement as I've been using some model of Palm since '95....

Palm: Please add the really needed features or innovate!

I realize Palm is far from dead right now, but $500M is only so big of a battery in the corporate environment. They've charged for the last couple of years and now, in my view, they are discharging.....But Palm has been there before only to come roaring back.

-T (650 ower)

I gotta agree with Andrew. I've been with Palm a good many years, from the Palm III til now on my Treo 650. I've considered upgrading to the 680, and still might in a few months. Sure, Palm/Treo has its shortcomings, and I think even the die-hard fan will cop to that... However, it is still the better device of the bunch. Palm has one big competitor with its Treo line, and that's the Blackberry. Not mentioned in many articles or in this one for that matter, the Blackberry shines in the corporate world, as does the Treo. Motorola/Nokia/Samsung and all others have a very small slice of that market. And as for the iPhone, YES it is a nice device, and it will do great things for CONSUMERS. Again, don't expect to see the iPhone in corporate environments. Besides that, it is "suppose" to sync with a contact/calendar/task/todo/notes software. I found it interesting that Jobs showed off almost any feature in his presentation, EXCEPT the sync feature. I'm curious on how that will work, especially on a Windows machine, syncing with Outlook. That's the biggest advantage of the Palm OS, besides the thousands of third party apps.
If Palm gets sold (which I don't believe is likely) it will not be because it is "dying"... it will be because their product has, albeit some shortcomings, the edge over many of the others in the market. Cheers!

I don't understand how you guys can still have such a positive view of Palm (the company). I love my Treo 650 and have been a Palm user since the PalmV and am reluctant to switch to a Symbian or Windows Mobile phone but they are being left behind. There has been no significant advance in the Palm OS in years and it is keeping them from offering devices with features that all their competitors have, namely Wifi and 3g. Even their windows mobile devices, despite not having the same networking limitation that their Palm OS devices have, do not have the Wifi that nearly every other windows mobile device released in the same time frame has.

Their newest Palm OS based phone, the 680 is basically a treo 650 with more memory and less battery. It wouldn't be positioned as a budget smartphone for the masses if Palm OS could go toe to toe, feature wise, with their own 750.

I still think that Palm OS is more usable than any other smartphone OS but after two years they haven't been able to bring it to parity with their competitors and there are no signs that they are going to. All this licensing nonsense with Access just makes things worse. They've allowed the operating system with their name to stagnate and let us down.

Anyone who believes the empty promises made by Palm management are fools...

Opinion: The decline and fall of the Palm empire
By Mike Elgan, Computerworld

The once-mighty Palm, still successful on paper from the momentum of past glories, is doomed to decline and failure. It wasn’t always thus. Here’s my preemptive post-mortem.

About 12 years ago, I met with a man I didn’t know, working for a startup I was unfamiliar with to see a product I’d never heard of.

The man was Ed Colligan. The startup was Palm Computing (though it had recently been acquired by modem maker U.S. Robotics). And the product was code-named “Touchdown,” later to be branded the “Palm Pilot.”

At the time, I was executive editor of a computer magazine, and Palm was just one of a dozen or so companies scheduled that week. Most of those meetings were forgotten minutes after they concluded. But the “Touchdown” meeting was a revelation. Colligan, now president and CEO of Palm, left me a device to test.

At the time, there were dozens of electronic organizers on the market. But the Palm Pilot blew them all away with its radical ease of use and zippy performance.

Since then, I bought seven Palm OS devices: Palm Pilot 1000, Palm III, Palm IIIxe, Palm VII, Palm Vx, Treo 270 and Treo 650. I even published for a couple of years an e-mail newsletter devoted to the platform called, “The Palm Reader.”

The company invented the first great “connected organizer,” a PDA that synchronized with desktop applications like Microsoft Outlook and Lotus Notes. A software developer of almost any skill level could create applications for it, and thousands did. Later, the founders of Palm invented the first great smart phone — essentially a Palm Pilot that made phone calls. They were cheap, simple and fun to use.

The genius behind both these inventions was, of course, Jeff Hawkins (pdf format). Together with co-founder Donna Dubinsky, Hawkins launched the companies and invented the devices that transformed — and, for a time, dominated — mobile computing.

The Palm Pilot was great for the same reason iPods, Macs and other Apple products are great. In each case, development was lorded over by a design and usability fascist driven by a powerful vision of the complete user experience.

What went wrong?

The tragic story of Palm’s fall from greatness is a history of squandered resources and misplaced effort.

As transcendent as the company’s product and design decisions were, its business decision-making was always problematic.

It all started when the founders of Palm raised money for the first product launch by selling the company to modem giant U.S. Robotics in 1995. The founders gained the cash they needed, but lost full control of both the company and the product — forever.

One year after U.S. Robotics was acquired by 3Com in June 1997, the founders left the company in disgust and launched Handspring, which eventually developed the first good mass-market smartphone, the Treo. 3Com made Palm an independent, publicly traded company in March 2000. In January 2002, Palm disastrously spun out its software division as an independent company called PalmSource. Then, in August 2003, the company merged with Handspring and renamed itself PalmOne. In April 2005, the company, now called PalmOne, spent US$30 million to buy the “Palm” trademark from PalmSource, and changed its name back to Palm. In December 2006, Palm paid $44 million for access to the Palm OS source code it used to own, so it could make its own software again.

See the trend?

Palm merges with another company only later to be spun off. The company ignores the founders’ direction, only to later acquire their startup and take up their direction. Palm spins out the software division only later to buy back the rights to it. Palm gives up the Palm trademark only to later buy it back.

How many times has Palm distracted, divided and plundered the company with spinoffs, acquisitions and mismanagement?

Palm’s official timeline provides another view of what went wrong.

From 1995 to 2000, many of the timeline milestones use the word “revolution” and feature multiple design awards for innovation. The company was an unstoppable, invention-crazy company focused like a laser beam on product greatness.

The news in 2000 was all about the rapid growth in developers, from 31,000 early in the year to more than 100,000 by September.

After that, the “milestones” are bland corporate blather about partnerships, new markets and boring new product launches. The “revolutions” and design awards moved from Palm’s history page to those of other companies.

It’s an oversimplification, but as control over Palm was transferred from the visionaries to the suits, the products became more generic and uninspired.

Which was OK — for a while.

Why Palm is doomed

Unless Palm finds its way, it may slouch into obscurity or cease to exist altogether in the coming years.

Currently, Palm is a profitable company with lots of customers, partners and investors. The company seems to be doing OK, and Wall Street isn’t worried.BlackJack

The problem is that the world has changed radically in just the past year. It’s hard to believe, but it was only a year ago that the smartphone purchasing decision was as easy as paper or plastic — BlackBerry or Treo?

But as more players jump into the smartphone handset market, margins shrink and user expectations rise. And everyone seems to be innovating except for the great innovator — Palm.

During the past year, all the major players launched “Treo Killer” devices, including Research in Motion with both its BlackBerry Pearl and the Pearl’s full-keyboard cousin, the BlackBerry 8800. Samsung’s goes directly after the Treo market. The Motorola Q is hot. Nokia, Hewlett-Packard, Sony, Samsung and others are all gunning for Treo with brand-new, full-featured smartphone gadgets.

And then, last month, iPhone changed everything. Jobs’ Macworld keynote was like a nuclear bomb in the world of smartphone enthusiasts. The “key influencers” who gave Treos visibility and cachet a year ago — Hollywood types, gadget freaks and absolutely everyone who’s anyone in Silicon Valley — have stopped talking about Treos and are simply waiting for the iPhone to come out, at which time they will unceremonially dump their Treos and embrace the new innovation leader.

Meanwhile, it looks like Palm isn’t even trying to innovate. Colligan said in an interview recently that the company is focused on ease of use, rather than design, and that the company doesn’t want to “follow design fads.” In other words, Palm is not only failing to set trends, it’s not even following them anymore.

Reason for hope

Despite my doom-and-gloom scenario, there is reason to hope that Hawkins may save the company yet again.

Rumors suggest that Jeff Hawkins is toiling away in some secret lab to build a revolutionary device that will leapfrog Palm ahead of the pack. If the rumors are true, Palm has a chance to survive. If false, Palm is probably toast.

The $64,000 question is: Has Palm lost its mojo? In other words, does Palm still think like Apple — that the product is everything — or is the company thinking more like HP, where partnerships, branding shell games and big enterprise deals are most important?

HP fails in the smartphone market in part because of an institutionalized delusion, common at most big and old Silicon Valley companies, that enterprises buy smartphones based on security, back-end infrastructure support and integration with enterprise systems in general.

Yes, those things are important. But in the smartphone market, cool is king, even at the biggest companies. RIM does a great job supporting business goals. But RIM is number one because people “love” their BlackBerrys. Palm is number two (but dropping fast) because people “love” (or used to love) their Treos.

A gadget that elicits an emotional response from buyers can emerge only from visionary design, and cannot be produced with a design-by-committee corporate culture.

Palm has plenty of cash and reasonable prospects for growth. My advice is to throw every penny at Hawkins and let him build the device of his dreams without interference. Everything the company now has started with Hawkins’ design vision.

Given its history, however, I think it’s likely that Palm will squander Hawkins’ genius yet again with another disastrous stunt, such as selling the company.

The software business, PalmSource, sold out to Japan’s Access Systems in a $324 million deal. The company changed the name of the operating system to the Garnet OS. That product is now headed for obscurity and irrelevance.

Will Palm follow PalmSource down the road to oblivion? We’ll see.

If the company can remain true to its founding vision, remain independent and out-innovate everyone else like it used to, you can disregard everything I’ve written here. But if Palm remains on its current trajectory, the company is history.

Mike Elgan is a technology writer and former editor of Windows Magazine. He can be reached at [email protected] or his blog: http://therawfeed.com.

All of us here are adults.
All of us here have likes and dislikes, we buy products, we patronise shops and bussinesses. Just because we like something, dosnt mean it will succeed in the dog eat dog world that is modern business.
Palm has made money for the last year, not great money but money nonetheless.
The big question is where do they go from here.
They do have a name and a product that people recognize...both Palm and Treo.
The question is where do they go from here.
They are relatively small in a market which is becoming more and more competitive and that requires significant monies for R&D, for Carrier Testing, for FCC compliance, For differentiating your smartphone/converged device from the other gals smartphone/converged device.
The WinMob 6 side of the business is ok, maybe even better than ok.
The Palm side is set to see some real change, either as a result of Access releasing their ALP operating system or because Palm will Fix/reengineer what we lovingly refer to as Frankengarnet.
There will be monies that will need to be spent to do more in house testing, more carrier compatibility testing, more FCC testing.
Those monies will not see a return the next quarter.
Phones get bought and paid for by Companies who give them to Employees
or by Families who give them to memebers. Many companies are already committed to RIM, Many companies are already committed to WinMob
Most Families can get an inexpensive phone or phones without spending what one Treo 680 will cost.
Iphone is coming. Iphone will make many people who have phones think about what they want their phone to do and say about them.
Many of those folks may have considered a Treo, many of those folks will get something other than a Treo.
Palm is under pressure to make money Next Year, not just a little money.
If selling the company and giving the shareholders a chance to jump ship and leave the competition to the next guy is what the shareholders want. It will happen. It should happen.
Question is what will deep pockets mean for Palm, will we get a good ALP, will we get a Treo that dosnt have to be patched because its battery dosnt play well with others, that has to be patched because its camera dosnt play well with others, that has to be patched because its rushed, unfinished, amatuerish.
Tomorrows Palm, what does it have to offer.

Palm and Treo: the best smartphone platform on the market.
So the Treo killer is the iPhone? Can we at least wait until that is released before we assume the market has completely changed?

Andrew,

You said above:

dsilver & Vito - reports are already coming out today that Palm acquisition rumours were unfounded...

If you read the entire article, the only thing Nokia was dismissing was their own desire to purchase Palm. The article went on to say that it might be a sweet deal for Dell or another high rolling technology player. It's not that I'm (wholly) looking forward to Palm changing hands; it's just that without evolution they will ultimately fall to the roadside with legacy devices being their only market strategy.

David

Andrew,

You really don't get it.

No one wants a slice of Palm!!! That is why the investment by Galleon was questioned-- it is not a justifiable investment strategy.

No one wants to buy Palm. Investment bankers profit greatly by orchestrating such transactions. Generally they entice the management with great personal financial rewards to make such deals happen.

Palm is in dire straits. Promoting the illusion that it is a sought-after investment is a time-worn strategy for boosting stock price or increasing perception of value.

Smoke and mirrors.

As the article(s) above illustrate, Palm management has shown a very consistent historic pattern of taking value away from customers and shareholders by using ill-conceived transactions to boost personal gains.

This appears to be yet another attempt to do so.

http://news.yahoo.com/s/nm/20070320/tc_nm/palm_takeover_dc_4

Palm is in play and a deal is expected shortly.