I am still collating information from CES 2009, which, again, I unfortunately missed this year, but undoubtedly the biggest wireless announcement to come out of CES (at least in terms of press, and especially the subsequent astonishing boost to Palm’s stock price) was the announcement of Palm’s new Pre handset. I’ve always had a very soft spot in my heart for Palm. I worked at GRiD Systems with Jeff Hawkins, who went on to invent the PDA as we know it today and build Palm into a company that’s had surprising staying power in the face of very serious competition, albeit through a number of incarnations and major changes. The company is headed today by an excellent management team, led by Jon Rubenstein, with whom I briefly worked at Stardent Computer back in 1990. I’ve personally owned a number of Palm products over the years, and was always quite happy with them. In recent years, however, the company has suffered from a degree of me-too, especially once they adopted the boring but serviceable Windows Mobile OS.
Pre looks like a nice device. But I’m puzzled why they announced it now, since it will be a number of months before Sprint (who have an exclusive on the handset) will be selling it. I generally recommend against announcing new products well in advance of their availability because so doing can put a real crimp in current sales as customers enter waiting mode or (gulp) buy something else altogether. Apparently Palm believes the Pre is different enough from their other products that it will attract an entirely new customer base, but that can’t possibly be true, at least for very long, as competition is so fierce. Or they believe they’re losing all current customers for cool phones to the iPhone crowd, and partially to the other iPhone competitors out there. That could be true, although the current Palm product line is quite good (and very cost-effective) regardless.
Now, I always thought the iPhone would be huge and thus attract waves of iPhone-alikes, and it has. Any serious handset vendor needs something in this class. But gaining competitive advantage – aye, there’s the rub. Pre’s marketing is stressing a cool gestural user interface, a robust browser, multitasking, optional inductive (cordless) battery charging, and unified messaging. The sliding keyboard isn’t unique, but will grab an audience that prefers a physical keyboard to the touchscreen alone. There’s Wi-Fi and GPS, but no memory card slot. So, sustainable competitive advantage? I don’t see it. But I do see a more competitive product for the times, although Palm’s competition will be well on the way to catching this product if it doesn’t ship until June.
Which brings me back to the runup in Palm’s valuation. Palm’s stock, which hit a low of US$1.42 on 5 December, about doubled to more than $6 since the 8 January announcement of the Pre, although it’s fallen back about 20% with the downturn in the market this week. I think the price will fall further – any earnings gain from the Pre won’t be realized until the third quarter at the earliest, another reason why announcements well in advance of availability are a bad idea.
