Palm revenue craters as Treos fall out of favor

The Centro is keeping Palm afloat, but it needs more than pretty colors to get back on track.

(Credit: Palm)

With revenue falling to dire levels, Palm may need a Christmas miracle to stay afloat next year.

The latest dose of bad news? Revenue for Palm's second fiscal quarter, which ended last week, will be just $190 million to $195 million, the company announced Monday ahead of its December 18th conference call. Wall Street analysts had been expecting Palm to record $331 million in revenue, an astonishing 41 percent gap caused by "reduced demand for maturing smartphone and handheld products," Palm said in a press release.

Last week Palm revealed plans to cut workers and refocus its business as it copes with a poor economy and strong competition from the likes of Apple and Research in Motion. Palm's Treos were once very popular, but they have looked positively ancient against the iPhone and new BlackBerrys such as the Storm and Bold. If it wasn't for the Palm Centro--which doesn't really break any ground on the software front but costs an attractive $99--Palm might already be dead.

The company's fortunes will be determined by a race against time: if Palm can get products using its Nova operating system--which scheduled to arrive in the first half of 2009--out in the market before sales of Treos dwindle to zero, it has a chance to regain its perch atop the mobile computing world. Otherwise, Palm is stuck in a moment and it can't get out of it.

[m.afshari]

Palm is dead! They have no future! I was a huge fan and a Palm OS developer and believer.. but they killed it with their miss management! bye Palm and Hello Apple!!!

[jvargas92]

I don't see how Palm can regain its perch atop the mobile device market. Yes, it has one of the first touch-screen devices on the market, but it's a long distant second-run device to newer and more popular devices such as the iPhone and the Blackberry basket of devices. A new operating system will need time to mature and be adopted by consumers, but the gap left in its product offerings coupled with the popularity of more current and appealing products such as the iPhone are going to make it harder for Palm to even come in fourth in this area. Sadly, they lost their spot a long time ago, and are not likely to make much more noise in this area, barring a serious miracle or fumble on the part of RIM and Apple.

[Tom Krazit]

They'd have to come up with something that advances the story, something that takes a step beyond iPhone/BlackBerry/WinMo/Android, rather than just catching them up. It's not out of the realm of possibility, but I agree, it's going to be hard.

[dagwud]

A new operating system doesn't need time to mature if that operating system smoothly runs thousands of existing Palm OS apps. Palm isn't exactly in the situation of Android or Apple having to build a marketplace of apps to run on their devices.

One reason I'm holding on to my TX is because I use SmartList To Go for taking database data with me. There aren't many alternatives for this. So if Nova runs SmartList To Go, as well as providing for better, newer software, I could be persuaded. I'm not yet, but I could be.

[Renegade Knight]

Unlike Apple Palm was already in the market. They should know exactly how to get back on track. If Apple can come out of nowhere, Palm can regain lost ground.

They are one generation away from market dominance. IF THEY PULL THEIR HEAD OUT and show us that they are not one generation away from corporate death.

[bringer666]

Agreed. I think it's too late. Palm is dead. I was also a Palm zealot, having one Palm PDA or smartphone for over 10 years but they have just not kept up with the rest of the industry. I have moved on to an iPhone and I assume all other Treo users have moved on as well to either iPhones, Blackberries, Google phones, or other cool smartphones that have hit the market.

[David Dudley]

I bet all those ex-Apple folk who fled to Palm are regretting their move now. Welcome to the sinking ship!

[thewoogie1]

Palm has been dying for at least 3 years... I can't tell you how many problems that customers have with their devices. People actually start to accept the notion of battery removal 3 times per day as normal.

[vip_m]

Palm should have...
1. concentrated on a stable, never-crashes OS;
2. provide wi-fi and great browsing experience/email;
3. provided a good keyboard like Blackberry
4. better support, quick fixes/firmware updates

and it would've complimented their strengths:
1. many useful Palm apps
2. very good synching, including Documents to Go, with full support for Mac and Windows
3. easy to use interface
4. affordable

Unfortunately, they

[sflocal]

I developed for Palm years ago. Finally threw in the towel a few years ago due to lack of direction from them with PalmOS. Put in quite a few years on it. What a shame. The executive staff really dropped the ball on this company years ago.

The iPhone could (should) have been from them.

They are dead in the water. But I will miss them.

[erichmercado]

How come Palm is not enthusiastic in updating the aging OS? It will be a blast for the investors and consumers if newest Palm OS aka Nova will arrive sooner than later.

I'm not sure why they keep their OS that way. They could have pour in resources to it and develop a competitive OS such as Blackberry's or even Nokia's to stay afloat.

In my case, I really prefer Palm OS over Windows Mobile because it is stable and faster but multimedia support and the interface is outdated.

How about if Apple will buy Palm? Do you guys think it will happen?

[Constable Odo]

What's really strange is that all those old Palm users claimed that their Palms were far better than the iPhone at nearly anything you could name. The apps were better and more plentiful, the platform was more open and the OS was more mature than the iPhone's. I wonder why a platform that was claimed to be so good fell out of favor. You'd really have a tendency to think that the better would survive and the inferior would fail. Well I suppose now it's Google's Android that is supposed to be the far better OS and within a year the iPhone's Mobile OSX will fall from favor. It is always claimed that the more open a platform is, the less chance it has of failing. And conversely as closed as OSX supposedly is, it should fall from favor faster than any OS in history. So far iPhone apps have reached the 10,000 mark in about six months but I guess Palm users say that's nothing since 4,000 of them are flashlight apps.

I hope all those developers who said they despised Apple for restraining their talents have gone to Palm to help rebuild that once perfect platform.

[Renegade Knight]

Good point. The palm platform itself does have all that software and applicatoins. More than Apple can handle and more than Apple is likely to ever approve on their limited storefront.

That said it's the hardware. Treo's are yestertech. iPhones current tech.

[DougInKY]

I really like my Palm TX and guess I will continue to use it until it rolls over and dies (might be a long while as I replaced the plastic screen on it with a glass one last year). My next pocket device will not be an iPhone as it ties you to AT&T and I will not deal with them. The G1 is looking good but doesn't have the apps I want/need. Maybe I will just continue with a cheap cellphone and get an iPod Touch. I don't know. And then again, maybe Palm will surprise us all and rise from the ashes of it's failed business with something wonderful.

[GajaKannan]

I guess Palm should become an Hardware vendor and adopt Android or Windows Mobile full fledged to stay current with the market. BTW, I know windows mobile is far inferior compared to BB, iPhone and Andriod, but listed it there because Palm already has relationship and ships windows mobile.

[onawaz]

Palm's challenges are big. How to become relevant in the crowded smartphone market. Despite the fact that Palm is credited with creating the smartphone market. Launch of Centro and recent challanges with Treo Pro. see my blog http://mobileconnections.blogspot.com for more details.

[billyfury]

I bought a Storm the day they came out. I really wanted to like it but after a week of struggle I took it back and had them refire up my 650. Come on Palm, you can do it. I dont want extra keystrokes you are the best at that.

[NWLB]

Palm died when they actually tried to argue people didn't want color screens or multimedia applications and gadgets.

[herkflyr]

It's too bad what happened to Palm. I have loved their products since the Tungsten E. However, an evident lack of focused management and quality control problems (and a lack of vision) have doomed the brand.

My Treo 680 is a good example of everything right--and wrong--with Palm. As with all Palm products, the interface is simple, intuitive, and very useful. I enjoy it and hope to for years to come. However, consider the following.

1. No Wi-Fi, 3G, or GPS. The 650 did not have these, but that is because the 650 was built before they came into their own. I will even concede that the 680 was launched before 3G and integrated GPS were the next big standard things in mobile devices. But to not have Wi-Fi, nor even the ability to install a Wi-Fi card, was inexcusable. Now if I want to surf the internet I am stuck with T-Mobile's glacially slow Edge network. In fact I doubt I access the internet more than once a month from my Treo--it is that slow.

2. Proprietary headset and hotsync connections. In a universe of standard headset connector jacks and mini-USB ports, Palm had to go and build their products requiring a separate Palm-only cord and headset--and this is after the Tungsten E did NOT have them! Again, why? Want to listen to music on your Treo? Plan on using the issued-with-the-phone headset or use an adapter. Your nice headphones you just got for Christmas? Nope, they won't work sans adapter. All those extra mini-USB cords you have sitting around just waiting to be used to hotsync? Nope, they won't work either. Better not lose the ONE cord you have for the Palm, or you will be buying another. And yes, I know that Apple has a proprietary charging/syncing cord...but lets face it, in a universe of old and new iPods, most people probably have more than one lying around, and if they don't, their neighbor does! I doubt the same could be said of the Palm cords.

3. I wanted to download the Gmail app for mobile devices (as opposed to checking my Gmail via the afore-mentioned slow Edge network). Whoops! Looks like the Gmail app requires a Java plugin that some of the early 680s came preloaded with, but now don't. It seems like Palm had a legal issue with IBM about a year ago. How does something like that happen AFTER a product launch?

4. For every time that I successfully hotsync, there are probably four or five times that my Treo locks up. I have learned to use the dB scan utility that I downloaded, and that usually fixes the problem, but should I really have to?


Well, rant over. I still think that Palm has good products for non-tech-savvy customers such as myself. There is still a lot good about what they have to offer. But it is obvious to me that Palm has suffered from weak and unfocused management for years now. It is telling that the company that pretty much invented mobile devices is rarely even mentioned in discussions of mobile computing.