Palm - can they weather the financial storm ahead of them?

by Administrator | Apr 29, 2010

When listing the names of some of the pioneers of the smartphone world, the name Palm must surely be included in that list, as that company was one of the first to offer many of the features that are now commonplace in modern smartphones. This happened in 2002, when their PalmOS operating system was used in the Handspring Treo 180. It was the first smartphone on the market to offer web browsing, email, calendar and a contact organiser. It also supported third-party apps that could be downloaded or synced with a computer.

All of these features are now standard across every smartphone on the market, so it is not unfair to call Palm pioneers.

Since then times have been a lot tougher for the California-based manufacturer. After their initial success, their later Palm Treo phones underperformed in the market and this lack of success left Palm in a precarious position. It was clear that something drastic was needed to turn the situation around and Palm offered this in the form of the Palm Pre -a revolutionary mobile phone, which was unlike anything the company had released before. Rather than re-use their original PalmOS or Windows Mobile, they instead chose to develop a brand new operating system, which was unlike anything else on the market.

PalmOS

This new operating system was WebOS. While it immediately caught people's attention when the Palm Pre was launched, it too has underperformed in the market. There have been many theories as to why this is; citing such issues as poor build quality in the Palm Pre, or the poor quality of the advertising and marketing surrounding it. The Pre has not lived up to the expectations of Palm themselves and the many commentators who predicted it would be an instant hit.

Despite having a unique product on the market, palm are once again left in a precarious position with their share price falling and many analysts predicting that they will only survive in the days ahead if they get bought by another company. This course of action has been refuted by Palm CEO Jon Rubinstein; who has said that they have a long-term plan in place, and that they have the assets and opportunity to make the company profitable once more.

Despite this refutation, other companies are rumoured to have expressed an interest in buying Palm. The most notable rumour is that Taiwanese manufacturer HTC were interested in acquiring the American company, and using the assets (particularly the WebOS operating system) in their own mobile phones. This rumour does seem to have been true, although HTC have since gone on record as saying that after looking at Palm's financial records they did not see enough synergy between the two companies to go ahead and make a bid. Many commentators have interpreted this to mean that Palm may be in deeper financial trouble than the general public realises, even though Rubinstein has been bullish about their future prospects.

The other company rumoured to be interested in buying Palm is PC manufacturer Lenovo. This would make a lot of sense for both parties as Palm would get an injection of much needed capital, while Lenovo would acquire the means to firmly enter the mobile market. Given the recent losses of some key Palm personnel including the Senior Vice President of Software and Services and the Vice President of Carrier Marketing, many commentators are hoping that Lenovo do make an offer to buy Palm, because they state as things stand; the future of Palm is looking grim.

Image credit: http://www.flickr.com/photos/abulhussain/

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