Fifteen years ago, the device that singlehandedly created the PDA market, and also probably did the most to start the e-book ball rolling, was the humble Palm Pilot. It was truly a marvel for its time—which is why it is so sad to see Palm floundering today, an also-ran in the smartphone market behind Apple and Android-powered devices.

Palm’s stock prices hit a 52-week low on Friday after a lackluster earnings announcement, and analysts have downgraded their opinion of the stock to “sell”—with two analysts even lowering their price target to $0 (meaning that they think Palm’s stock prices will eventually hit that amount).

Gizmodo, who comes right out and says “You’d Be Crazy to Buy a Palm Now,” lays the blame largely at the feet of Palm’s lack of development partners, noting the new Palm device only has 2,000 apps available as opposed to Android’s 30,000 and iPhone’s 150,000. The devices are nifty, but simply do not have the same appeal as competing devices.

Engadget goes farther, listing an extremely comprehensive litany of mistakes Palm made in releasing and marketing the Pre, such as announcing the device significantly earlier than they were able to release it (so that all the excitement had died away by the launch date) and a lackluster ad campaign. It makes some suggestions for things Palm could do to try to pull out of it.

The question is, can anything save Palm now that the iPhone and Android are so well-entrenched—and now that everybody is going gaga over the iPad tablet?

Update: Ars Technica has another great Palm post-mortem.


  1. Short answer: no.

    Long answer: Palm has been in a death spiral for ten years now. The fatal mistakes aren’t the recent ones with the smartphones, but rather the failure to read the tea leaves properly at the height of the PDA era.

    Palm made two common mistakes:
    First, they failed to recognize that “connected organizer” was a feature, not a product. That what people were buying wasn’t just the planner, but the computer that ran the planner. Even in its early days, people bought PalmPilots to run other apps on them. By focusing on the core planner feature they kept a stranglehold on their existing customer base, not a bad thing, and stunted the evolution of the underlying platform; a very, very bad thing. Thus they were late to color, late to multimedia, late to web access, and late to recognize people would want more connectivity to their planners–leading to a migration to phones as the preferred delivery vehicle for the planner feature–or that people might choose their planner platform for something other than the quality of its planner.

    Their second mistake simply compounded the first and sealed their future: they confused market share with market leadership. They strove to defend their market share from their primary competitor, PocketPCs, by relying almost exclusively on price and, again, the quality of their core feature. The focus on price allowed their PPC competitors to cherrypick the high-end of the market and pioneer advanced features at the platform level and, in effect, define the evolution of the PDA industry. By 2000 PDAs were defined by what PPCs could do, not by what Palms could do. New features (color, audio, video, graphics processors, WiFi, cameras, cellular connectivity) came to high-end PPCs first, then to lower-cost PPCs, and only then, did they filter through to Palms.
    At their peak in volume sales, Palm was practically *proud* to be a follower in technology.
    That has not changed since.
    Hence the death spiral.

    The modern electronics business, in all its separate markets, has one unavoidable reality; laggards die. Get too secure, too complacent, take your eye off the ball for an instant and you’re done for.
    Sony is facing that reality right now.
    Panasonic is headed that way.
    Palm has been on that road for a decade; they’ve lasted longer than anybody would’ve rationally predicted 5-6 years ago. But their fate was sealed long ago.

    It’s a Red Queen’s race; you need to run as fast as you can just to stay where you are. Anything less will take you where Palm is headed.

  2. I agree with Felix.

    Palm’s mistakes go a lot further back than the Pre launch (although they DID bungle that a bit).

    Years of platform stagnation, failed platform upgrade projects, business shenanigans instead of innovation (spinoffs, etc.) – those doomed Palm. The Pre is a fine platform, two years too late.

    I suspect that the track record of bungled platform upgrades played a role this time too, because it gave developers a reason to be cautious about the new platform too. Palm couldn’t afford that, when it was trying to play catch-up.

    And I say that as a Palm fan; I was still using a Treo (and not the Windows model either) as recently as 2008, although my iPod Touch was already starting to replace it.

  3. It’s terribly sad to see a one-time innovator go down the tubes. One of the wonderful things about the early Palm was its programability. You could make it do what you needed. (I have a bridge game as well as a reader on my ancient Palm III). I had really hoped they’d get back into the game with their Pre product launch but it wasn’t a game-changer at a time when they needed one.

    Can they get back in the game? It’s hard to see how. We all thought they’d come out with the iPad two years before Apple (instead they announced that weird expensive not-a-computer they yanked before its launch). Since the implosion of the PDA market, Palm has been a huge money sink. Too bad.

    Rob Preece

  4. Ah. Palm has been “dead” or rather has been talked dead now for a decade. The number of people that wants to be served by them gets smaller all the time. And that seems to be because we are talking about people who want special features on a device that makes it unsable according to their wishes. There still is no PIM-program on any smartphone or OS that equals the ease of the old Palm OS appart from the even older psion-software. And what have we got with Web Os? One of the last OS with real multitasking (Apple and MS crippling mulitasking to their own software-canon) and cut and paste from the start (Apple dragged up but MS ditches it because “it’s not needed”). Palm will enventually go under because implementation of good ideas that dont sell to the masses just does not count.

  5. Palm is likely to “go under” because they’re running out of money to keep trying. Its that simple.

    Good reviews, brand loyalty, quality of features are only as useful as the revenue they bring in. A well-reviewed product that doesn’t sell is indistinguishable from a piece of junk that doesn’t sell. Sad but true.
    That’s how free and competitive markets work; the consumer is king, not the pundits.

    Right now, the word is the investment group that last propped up Palm (on the strength of their plans for Pre) to the tune of half a billion dollars, is busy preparing their sales pitch to try and sell off whatever parts of the company might have value because with a target share price of zero, the company as a whole is worth less than the sum of its parts.

    Sooner or later, even pioneers run out of second, third, or fifth chances.

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