Palm's woes: Blame the management

Palm's woes: Blame the management

Summary: Palm blamed its second quarter shortfall on the delay of the Treo 750, but analysts reckon management is merely using the device as an excuse for poor execution. On the surface, the Treo 750 delay doesn't seem all that bad--after all it takes time to get devices certified with carriers.

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TOPICS: Smartphones
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Palm blamed its second quarter shortfall on the delay of the Treo 750, but analysts reckon management is merely using the device as an excuse for poor execution.

On the surface, the Treo 750 delay doesn't seem all that bad--after all it takes time to get devices certified with carriers. The problem: Palm's product delays have become habitual.

Merrill Lynch panned Palm and downgraded the stock to a neutral. Analyst Vivek Arya said in a research note:

"Palm cited product certification delays, and we believe the major reason was a complete miss (in 2Q) of Treo 750 shipments and a 2 week delay in Treo 680 shipments, both to Cingular. The magnitude of the miss also indicates possible price pressure on Palm's Treo 700p/w. We note Palm's F2Q07 miss follows F1Q07 warning due to price competition from Motorola's Q smartphone, and F4Q06 miss due to delayed launch of European Treo 750v smartphone."

Arya's mention of price competition shouldn't be underestimated. As I noted last night I was going to get a Treo until I noticed Verizon Wireless was pitching Motorola's Q for $99 with a $100 mail-in rebate. Count me in the "prosumer" camp that doesn't want to create PowerPoints on a handheld (or anywhere for that matter), but likes the data access a smartphone provides. I have nothing against the Treo other than the price.

In other words, price matters especially when the smartphone market is way crowded.

Piper Jaffray analyst Quan Zhang analyzes the channel:

"We believe the Cingular channel could offer a good competitive analysis this holiday season, and Palm's delay in certifying the 750v could adversely impact its market share at Cingular during this seasonally strong period. During the month of December we expect Cingular to offer more than 10 smartphones including the new Treo 750 (delayed) and Treo 680, the HSDPA Samsung BlackJack, the HSDPA (HTC) Cingular 8525, Cingular 3125, Nokia E62, BlackBerry Pearl, BlackBerry 8700, and potentially other new smartphone products. Compared to prior years, where BlackBerry products and Treos represented the majority of smartphone products, it is evident the smartphone competitive landscape has changed."

The big question is whether Palm's management can navigate this new environment. So far, the outlook isn't promising. Step one for the rehab of Palm's management team is to stop screwing up product launches--shouldn't a company like Palm know that carrier product certifications can be delayed? Jonathan Hoopes, an analyst at ThinkEquity who is actually upbeat on Palm's prospects, says "management must do better." Management better start soon because the jeers are getting louder by the minute.

Topic: Smartphones

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5 comments
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  • All I want for Christmas

    is a smartphone with Bluetooth that will let me hold a conversation and browse the web simultaneously do that I can talk to clients and enter orders at the same time. Is that really too much to ask?

    I don't need a camera, mp3 player, radio, or anything else except email. Help!

    Oh yes, and given what I need, then as a prosumer I really don't care about the price, just the coverage and the performance.
    aldux
  • It's about the OS

    This is merely the latest in a long line of missteps for a company that had it all, then lost it.

    Today's announcement is another milestone along a predictable path of decline. The overarching issue remains Palm's inability to move past an operating system that was considered obsolete years ago.

    Until the Palm OS is replaced by something more capable of delivering secure, leading-edge connectivity and application support, this company will remain on life support.

    The takeover drums beat more loudly with each passing day.

    Carmi
    http://writteninc.blogspot.com
    carmilevy@...
  • i love my palms

    Palm used to be a great company for putting out interesting PDAs. There used to be a choice in features but those days are gone.

    There are only three models offered these days. I get so-called offers of weekly sales but they never really have sales. They offer maybe a free SD chip that only cost them a few dollars. Never any price drop. The Palm outlet only offeres minor minute discounts to buy refurbed or open items.

    I love my currant Palm, i705 and Z31. But, I keep my eyes open for refurb specials on Win Mobile units. I would not have to buy third party apps to do my writing since they have Pocket Office or what ever it is called now.

    Pfyearwood
    pfyearwood
  • I still like my Palm but I have to tell you ...

    ... their woes are indeed of their own making. I don't accept that notion that PalmOS isn't a good OS that, by its simplicity, gives the device remarkable battery life and the device itself uses some really great technology but their customer services is terrible and their website is sparce of technical information. As a smartphone, the BlackBerry from RIM still outdoes PalmOS (and PocketPC for that matter). In the end though, in recent years Palm has always offered "too little, too late" to be taken too seriously in the smartphone/wireless device category. My own Palm has now bee relegated to being an eReader with MP3 and photocapabilities, even though, wiht more robust software (included wiht the device), it could be so much more.
    M Wagner
  • How typical.

    I love how when management fails, it still finds a convenient scapegoat, typically the staffers. I wonder how many staffers will get laid off for this in an effort by Palm's management to create enough of a smoke screen to keep public opinion off its back.
    jgmsys@...