Palm picks new pilot to run company

Then-Executive Chairman Jon Rubinstein holds up the Pre at CES 2009.

(Credit: Corinne Schulze/CNET)

This post was updated with more background information on Palm and at 3:10 p.m. PDT with analyst comment.

Palm announced Wednesday afternoon that Jon Rubinstein will become the new chairman and CEO of the smartphone maker. Ed Colligan will step down as Palm's chief after 16 years with the company.

Rubinstein joined Palm as executive chairman in October 2007 and will take over as CEO on June 12. Colligan will take some time off, then join Elevation Partners, the private equity firm that has a 25 percent stake in Palm. Rubinstein's appointment now appears to explain why it was him and venture capitalist and Palm backer Roger McNamee who showed off the Pre at last month's D: All Things Digital event.

In a press release issued by Palm, Rubinstein said, "I am very excited about taking on this expanded role at Palm. Ed and I have worked very hard together the past two years, and I'm grateful to him for everything he's done to help set the company up for success."

Colligan's departure means Palm is severing one of the last remaining ties to the company's days as a pioneer of the handheld market. As an early employee of Palm, Colligan left with Donna Dubinsky and Jeff Hawkins to form Handspring and returned when Palm bought Handspring in 2003. Colligan became CEO later, after Todd Bradley resigned in 2005.

Rubinstein is a former Apple executive, and retired as the head of the company's iPod division in 2005. Now, he takes over Palm right as the company begins to mount a comeback in the smartphone category by staking its Pre device directly against Apple's popular iPhone. The Pre was first introduced in January, but finally went on sale last Saturday.

Reviews of the Pre have been good, the general consensus being that it's a fine alternative to the iPhone. But while Pre sales have broken records at Sprint, the phone's exclusive carrier, they're low when compared to Apple's initial sales of the iPhone in previous years.

For many industry observers, Rubinstein's appointment was not a surprise.

"This had been a strange (management) relationship for quite a while," analyst Michael Gartenberg said. "It has been clear to most observers that Jon has been calling the shots for quite some time. This just formalizes it. It was very clear Palm's investors had brought Rubinstein in to run the company."

Palm's stock rose slightly, 2.25 percent to $12.26, in after-hours trading on the news.

CNET News' Ina Fried contributed to this report.

[sigzero]

I wonder how they will counter a $99 iPhone 3G?

[seven7dust]

they don't need to
Palm is aiming it's device at a different audience
although they'll be competing with Apple too
they'll also be competing agaisnt all those dumb phones , which are still the majority
plus there's RIM's blackberry line which although great for business use
isnt that great for web related stuff
then there s WinMo devices which have bloated feature sets but lack refinement !
plus to counter the iphone the pre has a real keyboard, some people like that{I don't mind either}
eitherway like I said in my post there's room for everybody !

[sanenazok]

Next version they make, they'll sell the current one for $89.

[Maccess]

$99 is the price with an expensive plan. Price of an unlocked iphone in other parts of the world ranges from $499 to $599. How willthey counter it? Easy, sell an unlocked no plan Pre for $299 to $399 in Europe and Asia, where people need unlocked phones so they can easily switch SIMs.

Jon Rubinstein is Apple's former hardware head. during his tenure, he worked on the iMac, and iPod.

[jbcahill]

Colligan is a smart dude! He's getting out of Palm while the getting is good. The Pre just released and Palm is at a high point is hasn't seen in a decade. Jon Rubinstein is coming in at the high point and it's all down hill from here. Once the new orgasma from the Pre wears off (which is already happening) Palm will begin its roll to the bottom...and never be seen again.

[Dan7637]

what high point? this a company that is gasping for its last breaths with desperate attempts to come back which they screwed themselves by partnering with sprint

[seven7dust]

and deservedly so , Look how different Palm is after he came aboard
good luck to palm and Rubenstein with all their new Web O.S devices
and I'm pretty sure that even palm wasn't expecting the palm pre to sell as well as the iphone
infact why compete with apple in the first place ,
70% of all phones sold are still dumb phones
there's place for everybody
the race has only just started now ,
and with a visionary like Rubinstein at the helm I'm sure Palm will innovate as well as anybody else

[slapppy]

Well Palm had their 15 min of fame, and Rubinstein got his wish to be a CEO. Since he couldn't get that job after 18 years with Jobs at NEXT and Apple. What did he think? Jobs giving up his position for him? Not going to happen.

[MyRightEye]

Rubinstein is a traitor!

[sanenazok]

Am I the only one that's annoyed by the "pilot" pun in the article title? Yes, we know, Palm used to make Palm Pilots. Ugh.

[josealva17]

Palm has some serious Apple envy, but pretty much every one does from Microsoft, Sony, record companies....

This is such a golden time for Apple.

[johnqh]

Palm made a strategic mistake to make Pre an "iPhone killer". The comparison between iPhone and Pre only strengthen iPhone, especially with iPhone OS 3.0 and iPhone 3GS.

It should have been marketed as a "WMo killer", and that would have been an easy battle for Palm.

Do not compete against the market leader directly. Try to become #2 first.

[Maccess]

"WMo killer" isn't much of an achievement, like making a "Zune killer."

[Weudel]

Palm didn't make the Pre an "iPhone killer" it was the media that did that. Call it what you will, Palm made (from all accounts so far) a good stable device with an innovative OS that WILL change the way smart phones operate for years to come. If nothing else, give them credit for forcing the big boys to up their game.

[dbloyd]

Microsoft should have picked this guy up. I bet he does help Palm make a comeback.

[Staszek]

I doubt he would have went. I think if he wanted to stay in a large company where he would have less influence he would have stayed at Apple. Palm was a place that with basically one product he could try and turn the company around. And a place where he would have control and beable to change things fast. You are not turning the MS boat around on a dime.

[ralfthedog]

Ed Colligan did not do that bad of a job. I think the Pre will get 100% of the business from smart phone users that have an irrational hatred of Apple. The number two position in a market that large is not a bad place to be.

[Zarland]

Start to sell an unlocked version for around $350 per phone, and Pre will fly off the shelves like hot cakes world wide. There is absolutely no reason to match Apple in a profitability per phone sense. They should do what PC is doing to Mac - Cheap functional products beats overpriced flashy gadgets.

[Staszek]

Hmmmm not sure what PC is trying to do to Mac is really helping their cause. No one, and I mean NO ONE in any industry wants to compete only in price. That shows your product has no real value except its cheaper. When you play in that market you only win while your the cheapest, and ther is always someone willing to go even a bit lower, thats a last resort strategy and not a good one. Its well known that the Apple profit margin is envied by almost every computer company. You dont have to sell nearly as many as long as you are profitable.

The whole make it up in volume arguement is one of the things that GM got in trouble for in the first place.

[AppleSuxLeo]

Palm is in good hands (brains) with this guy.
And what makes these Apple-trolls think Pre ver. 1.0 is all you are going to see from Palm and Web OS.
This is only the beginning.
BTW...every very Pro-Apple reviewer that used the Pre was blown away by the OS/UI and stated that Palm has raised the bar. And best of all it isn`t part of Apple`s Walled-Garden.
Did you hear about the $200 iPhone 3G S upgrade fee ? Bwahahahaha ! That`s Apple for you.

[Staszek]

BWAHAHAHAH your an idiot.

I am not a huge Apple everything fan, but your constantly trying to point out things that are untrue just because you dont like Apple is absolutely absurd.

First off its an fee that anyone on any network anywhere in the US would have to pay if they upgraded their SUBSIDIZED phone before their contract period ended. It has NOTHING to do with Apple and everything to do with AT&T, and the cell phone industry in general.

Go buy a Pre with their Subsidy and try to buy a new one a year later (into your two year contract) and see if you get the discounted price.

[AppleSuxLeo]

Palm/Web OS FTW !

[zmonster]

I don't know which platform will fail more quickly, Palm or Android. I guess only time will tell.

[rdean]

The Palm Eos is rumored to be arriving on AT&T and Sprint later this year. Based on the pictures, it's definitely going to be the replacement for Centro, and as such, I would expect it to be the $99 device.