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Palm seemed to have done everything right with its comeback kid, the Palm Pre. But despite this, with sales slowing, financial analysts have been downgrading the wireless handset maker’s stock.
Since peaking in September, at $17.75, Palm’s stock has fallen to nearly half that, closing at $9.11 on Feb. 22. In early trading on Feb. 23, it fell below $9, to its lowest level since March 2009.
“Palm’s superior platform features have not translated into sufficient carrier support and consumer demand, and we are concerned the window of opportunity may be closing as Google’s Android ecosystem gains ground,” Vivek Arya, an analyst with Bank of America/Merrill Lynch, wrote in a note to clients, according to Market Watch.
Palm released the Pre in June, to enthusiastic reviews. In The New York Times, David Pogue called it an “elegant, joyous, multitouch smartphone. … Palm nailed it.”
And in the Wall Street Journal, Walter S. Mossberg enthused, “Many other iPhone wannabes have physical keyboards, including the G1. But none combine that keyboard with the stylish software of the Pre and its beautiful industrial design, which makes the new Palm fee great in the hand.”
After a successful opening weekend, and anticipated sales of 1 million units in the first quarter of the Pre’s availability, sales remained modest – and smartphones running the Google Android operating system began arriving in earnest.
With the Jan. 7 announcement that updated versions of the Pre and its smaller sibling, the Pixi, would expand to the Verizon Wireless network on Jan. 25, Palm hoped that sales would increase.
“The Verizon Wireless launch of Pre Plus and Pixi Plus is the next phase in delivering this unique Palm experience to more people,” Palm CEO Jon Rubinstein said in a statement.
Analysts, however, were less certain.
“Getting access to Verizon’s pool of customers and its marketing strength is going to help Palm out, though now they’ll be competing with devices like the Motorola Droid,” Ken Hyers, an analyst with Technology Business Research, told eWEEK after the announcement. “From Palm’s perspective, Verizon is a very good operator to be with, so I think it will help them out. But substantially? I’m not so sure.”
The Pre, as well as the Pixi, have indeed faced competition from the Droid and other Android-running running devices, as well as from the iPhone and BlackBerry handsets. While the RIM operating system shipped on 34 million smartphones in 2009, Android – growing 3.4 percentage points since a year earlier – shipped on 6.8 million handsets, while WebOS shipped on 1.1 million smartphones, according to Gartner.
Some analysts, however, believe that Palm may still manage a comeback.
“Though slower than expected, Verizon’s launch (and pending AT&T) remains a significant milestone for awareness and distribution, positive for long-term upside,” RBC Capital Markets Analyst Mike Abramsky wrote in a Feb. 23 research note, according to Market Watch. “Palm’s unique software abilities, ecosystem and vertical integration remain intact, as does its positioning to capture share of the large smartphone market.”