Palm's third-quarter results were worse than feared, possibly as a result of bad choices and the difficulty of launching a new platform. One fix could be to turn to Google's Android mobile operating system, which consumers are embracing. However, some financial analysts are questioning Palm's future viability.
Palm's poor third-quarter performance may be the result of bad choices,
paired with the difficulty of rallying support behind a new mobile platform.
While an aggressive ad campaign could help, it can't be the only answer to Palm's
woes, industry analysts say.
On March 18, the maker of the Pre and Pixi mobile devices reported selling only
408,000 smartphones during the quarter-a loss of 29 percent from the second
quarter of the year and 15 percent year over year.
"Our recent underperformance has been very disappointing, but the
potential for Palm remains strong," Palm Chairman and CEO
Jon Rubinstein said in a statement.
Not everyone shares the same optimism. The company's stock price was
hammered March 19, dropping as much as 18 percent. Several Wall Street analysts
were quoted in publications as questioning Palm's viability. Morgan Joseph
analyst Ilya Grozovsky was quoted
in the Wall Street Journal
as saying Palm's "death spiral is
Grozovsky said Palm's problems will only get worse as carriers and suppliers
"increasingly question the company's solvency and withdraw their support."
Analyst Neil Mawston, with Strategy Analytics, said he believes Palm made
some wrong moves, but there's still hope of getting back on track.
"Palm made two decisions last year that, in hindsight, were far from
ideal," Mawston told eWEEK. "First, Palm initially launched its
flagship Pre with Sprint, a struggling operator that lacked the marketing clout
of the big two, Verizon Wireless and AT&T. And second, the launch timing of
the Pre was very close to the launch of the Apple iPhone 3GS. Right from the
get-go, Palm did not maximize its mind share and much of the early publicity
for the Pre was crowded out by the iPhone hype."
Expecting a disappointing quarter, Rubinstein
warned Wall Street Feb 25 and sent out a companywide memo
to encourage employees,
saying several awareness-raising initiatives, including a massive ad campaign,
were under way and asking them to remain "laser-focused" on any means
of driving sales.
"Our goals are taking longer than expected to achieve, but I am still
confident that our talented team has what it takes to get the job done,"
Rubinstein wrote in the memo.
"Advertising is table stakes," Endpoint Technologies analyst Roger
Kay told eWEEK. "Apple has managed to use the media as free advertising,
but they're the exception. ... [A company] like Palm can't let up on their
advertising expenditures, and just because they spend doesn't mean people are
going to buy. All advertising does is tip people to the product, and the
product has to carry it from there. If the product isn't catching on, no amount
of advertising is going to change that."