Palm gets in game but doesn't change it; Reality lurks

Palm unveiled its long-awaited operating system and Pre device and has generated a lot of love among the tech set.

The OS -- webOS -- appears elegant, and the Pre looks like it could be a winning device. Sprint is also betting on Palm and is showing that it continues to be on the forefront of the latest devices.

Add it up and Palm apparently hit a home run at the Consumer Electronics Show on Thursday. The reviews (Techmeme), which are mostly based on the browser, are strong. Jon Rubinstein, chairman of Palm, clearly worked the press conference and wowed a lot of folks--including our own Andrew Nusca.

But reality looms. Om Malik notes that he is skeptical that Palm's latest and greatest can save the company. Om says he appears to be the only one that's skeptical. Om's problem: He can't reconcile Palm's financials and market standing with the gadget lovers' Pre-conquer-the-world riffs. I can't either. Now it's a party of two.

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Palm introduced some neat features--especially integrating a bunch of contact and calendar services. But is Palm's OS and device elegant enough to change the game or merely get into it? Meanwhile, Palm doesn't launch its new device until the first half of 2009. If Palm's launch happens closer to June than March there's nothing that it showed yesterday that can't be replicated by rivals.

For sure, Palm's effort looks much better than Windows Mobile (what doesn't), but relative to RIM devices and Apple's iPhone Palm shot for par. And even developers at Macworld were talking about Palm's OS. In other words, Palm's Pre with the webOS gives the company hope but it's still a long shot. Palm may ding Android devices, but the average consumer--the one that will decide Palm's fate--isn't going to sweat developer nuances that we obsess about.

	Image Gallery:A walk around the Palm Pre device running Palm Web OS.

Why? For starters, Palm is hitching its wagon to Sprint, which is outgunned by both Verizon Wireless and AT&T. Sprint isn't going to land switchers. Meanwhile, Palm's financial situation still stinks. The company bought some time with a $100 million cash infusion. Palm is also losing lots of dough as revenue shrivels with its limping lineup.

The Pre comes in the first half and may save the day. But that's not such a sure bet. The hurdle is this: Is the Pre good enough to lure folks away from RIM or Apple?

Possibly, but unlikely.

A lot of RIM users used to be Treo devotees. But does nostalgia get you anywhere? No. Remember a lot of the people that would love to get a Pre are locked into contracts for the iPhone, Google's G1 phone with T-Mobile and the BlackBerry Storm with Verizon Wireless. Bottom line: The people that are most likely to be evangelists for Palm are tied up elsewhere.

Would you pay a financial penalty to get a Palm Pre? I didn't think so.