Still-Ailing Palm Ditches Windows Mobile to Focus on WebOS

Though Palm’s Pre received positive reviews and saw initially strong sales, they were only enough to buoy, not rescue, the sinking phone maker.

On Sept. 17, Palm reported total revenues of $68 million for the first quarter of fiscal year 2010, which was down from $366.9 million in the same period the previous year. Gross profit for the quarter was $2.8 million.
 
Palm shipped 823,000 smartphones during the quarter, the “vast majority” of which were the Pre devices. The number represents a 134 percent jump from the previous quarter, though a year-over-year decrease of 30 percent. During a call with analysts, Palm CEO Jon Rubinstein called the quarter a “landmark” for Palm, enabling it to show off its vision and potential in developing integrated hardware, software and services.
 
In a released statement he remarked, “We’re making significant progress with Palm’s transformation, and our culture of innovation is stronger than ever. We’re launching more great Pam WebOS products with more carriers, and turning our sights toward growth.”

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Palm also announced that it will stop using Microsoft’s Windows Mobile operating system and instead focus on its well-received WebOS. The Palm Pre runs WebOS, as will the Pixi—a smaller-screened, lower-priced sibling to the Pre, scheduled to arrive in time for the holidays.
 
The news can’t be a good one for Microsoft, which is struggling to boost its brand awareness in the mobile phone market as it prepares to launch Windows Mobile 6.5 on a number of new phones on Oct. 6.
 
“This very same thing is what Bill Gates did to IBM, when he announced that he was going to work on his own platform, Windows, and reap the benefits of that,” Roger Kay, president of Endpoint Technologies, told eWEEK. “That’s of course a piece of history, but if you look at how it fits, if a company sees a way to move forward, it would tend to focus on its own technology, especially if it has limited resources.”
 
Kay calls the move away from Windows Mobile a “very natural decision” for Palm, as it “begins to fully realize itself, and take stock of what it has and what it wants to do.”
 
Looking forward, Palm is expected to encourage its small growing trend. Its financial statement reveals it is planning product launches with additional carriers in the second half of fiscal year 2010. Those launches, states Palm, “together with continuing sales from products launched in the first half of its fiscal year, are expected to yield stronger operating performance, resulting in non-GAAP adjusted revenues for fiscal year 2010 of $1.6 billion to $1.8 billion.”
 
Kay offered the example of Apple, of which Rubenstein is a former employee, as another example. “If you think about the Apple legacy,” he said, “they focus on one thing that really works, instead of having multiple platforms. People give Jon Rubenstein a hard time, but he can’t have worked there for that long and not learned a thing or two.”