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September 4, 2007 4:54 PM PDT

Rock bottom for Palm and Hawkins?

Suddenly, it seems even more fitting that a company called Elevation Partners recently took a stake in Palm.

This might be rock bottom for the storied mobile-computing company. The decision to cancel the Foleo even before letting people get their hands on it is an embarrassing admission that Palm's vision of the computing world is way off base from the rest of the world, and it's a black mark on the otherwise stellar career of Palm founder Jeff Hawkins.

It's hard to dump too much on Hawkins. The man invented the Palm Pilot and the Treo. I once invented a novel method of stacking beer cans in a fridge (the key is not to buy any food). But after Hawkins unveiled the Foleo at the D: All Things Digital conference--arguably the most prestigious gathering of the computing elite--with proclamations like "it's the best idea I've ever had" and "the most exciting product I have ever worked on"--Palm's decision to cancel it without even a product launch must be mortifying for Hawkins.

Now, Hawkins has his own company, Numenta, which is trying to develop a computer that works like the human brain. If he pulls that off, we'll forget all about the Foleo.

But what is Palm going to do? Speaking of mortifying, Ed Colligan must be wondering why he gave Hawkins $10 million to go down into the basement and come up with Palm's Next Big Thing, only to emerge with the Foleo. Almost universally panned by analysts and bloggers, the Foleo was a lightweight Linux "mobile companion" that was designed to read e-mail, but didn't work with corporate e-mail software from RIM or Motorola, among a multitude of other sins.

Palm founder Jeff Hawkins (right) shows The Wall Street Journal's Walt Mossberg the Foleo, canceled Tuesday by Palm.

(Credit: CNET Networks)

Palm has squandered its position in the mobile-computing world by failing to improve its operating system since 2004, come up with a noticeably different Treo since the Treo 600, or clearly articulate any vision of where the company thinks smart phone development is headed. The company wisely hooked up with Microsoft to ship Windows Mobile Treos, otherwise this post might have been written a year ago. But it has watched companies like Motorola, RIM, LG, Nokia and even Apple pass it by while it tried to make its biggest splash of the year with a product canceled just three months later. Imagine the reaction if Apple had canceled the iPhone in April.

Jack Gold of market research firm J. Gold Associates thinks Elevation Partners is starting to throw its weight around a little. "Hopefully they are coming in and cracking the whip and making them do the right thing," he wrote in a research note distributed Tuesday. After all, Palm clearly still hasn't found what it's looking for.

Palm also announced Tuesday that Bruce Dunlevie of Benchmark Partners is resigning from Palm's board, while Scott Mercer will stay. Mercer was going to resign from the board to make way for Fred Anderson and Roger McNamee of Elevation Partners, but now Dunlevie (who's also on the board at Numenta) is out. Anderson and McNamee haven't formally assumed their positions yet as the deal hasn't formally closed, but perhaps their impact is already starting to be felt.

While it's embarrassing, Colligan made the right decision. You've got to know when to fold them, and the Foleo wasn't going to beat anything better than a pair of sixes.

You're supposed to have an intervention after the downtrodden hits rock bottom, but Colligan's moment of clarity could still allow Palm to recapture some of its past glory.

However, Palm better think long and hard before the next time it tells people it's about to change the world of mobile computing. The company is in danger of watching a category it helped create leave it in the dust.

Tom Krazit, a staff writer for CNET News, focuses on all things Apple. He has covered traditional PC companies such as Dell and Hewlett-Packard, chip companies such as Intel and Advanced Micro Devices, and mobile computers ranging from Research In Motion's to Palm's. E-mail Tom.
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Add a Comment (Log in or register) 23 comments (Showing first 20 comments)
A computer that works like the human brain?
by tundraboy September 4, 2007 5:38 PM PDT
You mean prone to bias, prejudice, irrationality, illogical conclusions, and plain old forgetfulness? Pass.
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Revenge of the Newton...
by Mehboob Alam September 4, 2007 5:52 PM PDT
people are falling over themselves to buy the iPhone.. I'm sure Steve Jobs is laughing, quietly..
Reply to this comment
Form Factor and Interface
by wcmack September 4, 2007 6:17 PM PDT
Palm is a company with a great past. Most of that came from exploiting a breakthrough form factor (the handheld PIM) and interface.

The company's ability to exploit those breakthrough has come to an end. For Palm to regain primacy in the product and market space, it needs to use cutting-edge technologies out there today to develop either a new form factor or a new interface or both, for an infomation-entertainment device.

It also needs to take a new in-depth read of the market and place itself firmly into a segment that it can recapture. Should it go for the business segment or the entertainment segment?

The iPhone is a phenomenal piece of technology, but it is far from perfect. It is weak as a PIM with integrated functions. Its tie to AT&T for the next two years puts a world-class piece of hardware together with a less-than-worldclass content delivery platform.

So Palm has areas it can exploit. But a "pPhone" won't do it. Palm needs to up the ante with a new breakthrough device that will push the game beyond the admittedly impressive level that Apple has created.

This is Palm's challenge. Is Hawkins up to it? I doubt it. Palm needs new blood with new ideas in the design function.
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The Foleo is not dead
by feranick September 4, 2007 6:31 PM PDT
Although I am the first to say the Foleo is wildly underwhelming, We should be fair. What has been canceled is the current generation of the Foleo, powered by a specific version of Linux. THe reason it has been pulled off is because having two platforms to maintain is simply not sustainable by Palm. The next generation will be powered by the same OS that will power their new phones. So we will see the Foleo, like it or not.

In other words, the implementation was killed, not the vision.
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Good and Bad
by perlstar September 4, 2007 7:30 PM PDT
I played with a real-live Foleo at LinuxWorld.
Instant On: insanely good. I would almost buy one just for that.
Can't sync my Palm to it: bad. Although, if it would do everything my Palm E2 does, so I could switch to using it instead: good.
Bluetooth & WiFi: good.
Price: seemed a bit expensive for what you get.
Size & form factor: very good
I forget how the Foleo is powered, but AA batteries (NiMH) would be good. At least as an alternative, or an add-on auxiliary power source.
--
Fix the bad, and keep the good, and it will do as well as the Palm Pilot did. Sascha Segan's recent PC Mag article (search for "four pillars") articulates this well.
Reply to this comment
Might be good thing.
by inachu September 5, 2007 5:14 AM PDT
If he is pulling back to put resources elsewhere then I hope to have a brain emulator in my pocket?
Reply to this comment
Yikes
by Cub Fan Al September 5, 2007 6:38 AM PDT
I just saw this gizmo on their web site a month agao and now it is dead already?

Maybe they should concentrate on their core and build a better Treo phone...I have been waiting for one with built in GPS capabilities for months, My Motorola phone works perfectly as a GPS device. Even RIM has a Blackberry now that will do that, and good old Palm is still hanging out there with a "dumb" smart phone.

Get with it dudes!
Reply to this comment
it was too old to be new
by ColdMast September 5, 2007 7:22 AM PDT
They were looking into the past of pocket organizers to make a product that people bought rather that a thing that people want.

Keys: Bigger
Screen: Brighter
Size: smaller
Style: sleeker
Price: cheaper

Then Palm might have a chance for profitability
Reply to this comment
Palm Has Potential
by Renegade Knight September 5, 2007 7:25 AM PDT
They have missed the boat time and again, and yet they still have one heck of a lot of potential as a company.

So what if the Folio died? It's coming out with a lot of new ideas to see which ones takes that's going to make this company. They can't just keep slinking along.
Reply to this comment
Interesting
by Charleston Charge September 5, 2007 7:29 AM PDT
Tell me more about this beer stacking method...
Reply to this comment
A REALLY dumb idea from the start
by sierralink September 5, 2007 8:48 AM PDT
The only thing it was missing was a Cue Cat. A monkey could have spent those millions in a much more productive way. RIP Palm, thanks for the start but you've become obsolete.
Reply to this comment
Nope.
by thriftyT September 6, 2007 4:35 AM PDT
Mr. Krazit,

Looks like you jumped the gun on Sept. 4th.
It is now Sept. 6th and HP just announced a new line of iPaqs and
Apple just announced that the iPhone can be had for $399.

NOW Palm has hit rock bottom.

Good night, and sweet dreams Palm.
Reply to this comment
Uh, No
by rbiz September 6, 2007 6:18 AM PDT
Even reporting about Palm is just beating a dead horse. As
recently as five years ago I still had semi-high hopes for Palm
getting off its collective backsides and doing something to
reinsert itself into this nitch, and now - thanks to Apple et. al. -
all of a sudden, fast growing segment of the computing market
place.

It seems it was back in the mid '90s, after "partnering" with
Microsoft, that Palm enjoyed a sudden and quick (as in short-
lived) burst of industrial creativity, then they just kept sinking
slowly and surely toward obscurity. They've already been
railroaded and no one seems to really feel it, not even Palm.

Of course you never know, but I stopped holding my breath a
couple of years ago. Up until now Palm has not even had any
real competition, (maybe that's the problem), and what did they
choose to do with that time? ...squander it away. What a shame.
Bye Palm.
Reply to this comment
The chance for redemption?
by appledogx--2008 September 6, 2007 8:59 AM PDT
OK. Rock bottom hurts. Apple was there before the bondi blue
iMac. If Palm could come out with something like an iPod touch at
the SAME price, with WiFi, browser, email, the usual PDA apps but
mure usable, a similar killer interface without tons of buttons and
supporting 3rd parth applications, they might be able to pull a
great comeback. If they don't do it soon and Apple wakes up first
and adds the PDA stuff to the iPod, Palm will be the first Edsel of
the 21st century.
Reply to this comment
Maybe 5 years ago this would have been good
by umcrouc0 September 6, 2007 11:01 AM PDT
I guess this was conceived before small fully functional laptops were around? It's too big for the PDA/smartphone market (even the size of the first blackberry is too big these days), and too useless for the mobile computer market. Great combo there. I'm sure everyone wants a computer that can't run any of their programs or a mobile device that they need a carrying case for. Guess they never heard of Tablet PCs either.
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Palm Company
by jkamenetz September 7, 2007 7:07 AM PDT
I passed about four generations of Palm Products.
My feeling is that Palm has an issue with life cycles of the new products (such as LifeDrive and Zire ). Support is minimal. Updates for pressing software issues as in the case of LifeDrive are not forthcoming.When I write to Palm, I get the impression of a total lack of will to improve the service and the products.
Therefore, my next products will be Windows-based products.
This is written with great sorrow as the third party developers have some very good products and they are let down by Palm.
Reply to this comment
Foleo A tough portable.
by kjim9 September 7, 2007 9:29 AM PDT
I was looking forward to the Foleo and wanted one. I was planning on upgrading it with flash drive and/or cracking the case to add memory. It looked to be a tough small laptop without a moving hard disk. Of course, I use linux and linux doesn;t scare me. With the extra memory applications could be added as needed.
Jim K
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About News - Apple

At the start of the 21st century, there's no tech outfit more influential than Apple. CNET News' Tom Krazit and other reporters will attempt to make sense of the rumors, hype, products, and people that will shape the future of the company. But Apple's not the only game in town, as the established cell phone companies and others strike back against the iPhone. E-mail Tom at Tom.Krazit@cnet.com.

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