The cavalry has arrived for Palm - in the form of a $100 million injection from Elevation Partners announced today. The company, which has been burning through cash, will now be able to afford some promotion for Nova, the new Palm OS expected to be announced at CES, as well as new mobile products that are in the works.
We'll ask the question yet again: Is it too late for Palm? Elevation, which bought a 25 percent stake in Palm last year, clearly doesn't think so. In a statement, Elevation co-founder Roger McNamee said:
We believe that Palm is in a position to transform the cell phone industry, and we are pleased to have the opportunity to make this additional investment in the company. Palm has an industry-leading team and an exciting, differentiated product roadmap. We are proud to be associated with the company and look forward to great things from Palm in 2009 and beyond.
Hmmm. Can Palm really transform the cell phone industry? Let's give Palm credit where credit is due. It was a handheld computing pioneer, a name that was synonymous with PDAs, which were the predecessors to smartphones. But since then, Palm - aside from early Treos - has fallen into the shadows of Apple's iPhone, RIM's growing portfolio of consumer-friendly Blackberrys and Google's Android OS, which is expected to appear on more devices next year.
Palm CEO Ed Colligan maintains that the smartphone game is still in the early stages and that Palm has strong brand equity that is still attractive to users. He recently said:
There’s an enormous amount of opportunity left. If you look at just the replacement market in this business, every year there’s phenomenal numbers of even just replacement devices, so the chance that there’s not another opportunity ahead or we can’t build a platform position here I think is not real. So it’s incumbent upon us to create really compelling products and a differentiated enough platform that people will recognize that and come to Palm.
The $100 million definitely buys Palm some time to build that "differentiated enough platform" and those "really compelling products." But is it enough for them to survive a new competitive landscape, as well as a rocky economic climate?
Shares of Palm surged on the news, up more than 25 percent to $3.12 in morning trading.