The reduced revenue guidance for Palm’s current business year, announced Thursday, is suggesting to industry observers that the company will either have to make major alterations to its business plan or find a buyer. The slower-than-expected consumer adoption of the company’s products — which pushed Palm’s annual projections well below its earlier forecast of $1.6 billion to $1.8 billion — was no big surprise to industry observers.
“Having an excellent product is not the guaranteed formula for attaining marketplace success,” noted IDC Research Manager Francisco Jeronimo. “Palm has an excellent platform, the webOS, but the company’s lack of a wider portfolio and the strong competition from Apple and Research In Motion has been impacting the business.”
The smartphone maker needs to invest and invigorate its brand, Jeronimo observed. “The question is whether or not Palm has the money to do this,” he said.
Losing The Value Proposition
Palm’s webOS is “very gesture-centric” compared to rival offerings and thus may not appeal to the full range of smartphone buyers, noted Roberta Cozza, a principal analyst at Gartner Research. Moreover, other analysts pointed out that Palm has failed to educate resellers about the benefits that webOS devices offer consumers.
“Every time I go to a store in the U.K. and ask about the Palm Pre and what I can do with the device, salespeople struggle to explain,” Jeronimo said. “A minute later, they are asking me” whether (I) have considered “the iPhone, or a Blackberry.”
The Palm Pre’s hardware, user interface, form factor, services and pricing offer nothing superior to what stronger smartphone brands such as Apple and RIM already offer, Jeronimo noted. However, if Palm’s technology was backed by a well-known brand with global distribution channels, it would doubtlessly be doing far better, other analysts say.
“They need scale,” and an “acquisition is the…