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Palm reading: Will the Pre and webOS save Palm?
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Last week all eyes were on Palm as it launched its new operating system, webOS, and its new handset, Pre, at the Consumer Electronics Show in Las Vegas. The company delivered a knockout performance. Both the handset and OS seem to be a highly intuitive and innovative combination that promises to bring an elegant simplicity to the mobile web.
The big question is: Now what?
Palm has said the device will be launched exclusively in the U.S. by Sprint Nextel sometime in the first half of 2009, and has not revealed the price yet. Palm plans on launching an HSDPA/UMTS version in Europe also in the first half of 2009, which may eventually migrate to the U.S. market and make the phone available to AT&T Mobility and T-Mobile USA. For it to be competitive with Apple's iPhone 3G it will have to be priced around $200 when paired with a two-year service contract.
Clearly, Palm has a lot riding on this: years of development costs, the expectations of nervous investors and, in all likelihood, the company's very survival.
Avi Greengart, and analyst for Current Analysis, tested the Pre before its launch at CES, and said he was immensely impressed. "They've taken the PDA, which is Palm's heritage, and taken that to the next level," he said.
But even if the OS and the device are powerful, visually stunning, provide excellent ease-of-use and might be appealing to both the consumer and enterprise segments, will it pay off? And why Sprint?
Palm may have gone with Sprint, as Greengart argues, because Sprint has historically been Palm's launch partner, and Palm was the most comfortable with them. Or Palm could have looked at the other carriers--AT&T Mobility has the iPhone; Verizon Wireless has RIM's BlackBerry Storm, T-Mobile has the G1--and decided it would be best not compete with those phones. Or Sprint could have simply offered them the most marketing money.
However, if Palm is expecting customers to switch their wireless service to Sprint in droves the way they have gone to AT&T to get an iPhone, they are misguided. Both Sprint and Palm seem to have preempted this line of thinking, with Sprint CEO Dan Hesse saying at the launch that the companies want to lure "first-time users" to the phone--i.e. those who have yet to buy a smartphone.
"By all accounts, the device is a multi-tasking, multi-threading masterpiece with a distribution problem," said John Jackson, vice president of research for CCS Insight. "A lot of it is going to depend on the extent to which they can crack the distribution problem."
Are there enough customers out there who have not yet purchased a smartphone (and thus, up to this point have not felt comfortable enough to buy an expensive phone and a monthly data plan) to make the Pre a hit? And will this gamble pay off in the midst of a recession?
"They did everything to meet the high expectations of Palm watchers and market watchers. It is one SKU at one carrier in one country," Jackson said. "That is not enough to save Palm."
It may be that both Palm and Sprint, desperate for a breakout success, decided they could mutually benefit if the Pre takes off: Palm would have dedicated marketing support and could get the product to market quickly, and Sprint would have a bonafide hit.
"[Palm is] betting the company on this product and they want to go with a partner that will back them to the hilt," Greengart said.
Will it happen? I would love to see both Palm and Sprint deliver a compelling, reliable, fast and innovative mobile web experience. But Palm seems to have bet simply everything on this proposition. -Philip
Comments
Posted by Anonymous | January 14, 2009 - 11:26am
Carrier brand trumps device brand. And opinions about Sprint are falling. There are several reasons Sprint loses over a million subs a quarter. Who will switch to Sprint for Pre?
Another issue: what developer wants to use its time and money developing applications for a newborn webOS, when several, proven OS exist. WebOS share is nonexistent and the risk of wasted apps development is high.
Hope Palm survives. I’d like to try Pre, but will only do so when it’s available on other carriers, and has a good range of apps.
Posted by Big Joe | January 14, 2009 - 1:45pm
The market in general doesn't care about carrier brand over device brand. People flocked to the iPhone before it was even released. If Sprint had picked up that contract from AT&T they would have seen growth in their subscriber count. The IT guys of the world may choice carrier over phone but they don't make up the market majority.
Posted by GQ | January 14, 2009 - 3:09pm
Disagree on the first post, agree on the second. People seem to not care about carrier as much as they do device. And any perceptions formed of a carrier are based on either brand marketing or personal experience (tv commercials, customer service experience).
Truth is, I believe there was once a strong Palm OS following out there and still could be. If WebOS proves to be a viable alternative for consumers than the iPhone and the same for IT departments than Windows Mobile, then application development will follow.
Don't be fooled though, this isn't an iPhone killer. Nothing really can be. I think Hesse is on the right track with this public statements, aim for the non-smartphone users. Smartphone market penetration is on the rise but most people still haven't made the transition. And if they have, rarely do folks know how to truly make themselves more efficient through the use of a smartphone and it's applications.
I think Sprint/Palm needs a strong marketing campaign around the product and WebOS. And why isn't Sprint making a stark comparison of its data plan pricing compared to Verizon and ATT. Sprint is $15 compared to $25/30 on Verizon/ATT. That's where the focus should be!
Posted by Anonymous | January 14, 2009 - 3:11pm
With CEO Dan Hesse professing that Sprint will not launch a pricing plan war it would only make sense, and greatly benefit Sprint in doing so, to launch this phone with an unprecendented price structure. Hardware costs, as we have traditionally seen, can be recouped on the back end of a consumer's lifecycle. So, with a revamped customer focus, second-to-none 4G technology on the lurk (and currently the best data service domestically in 3G), cleverly effective advertising and an industry changing price point this could be a huge turn for Sprint.
For Palm, this product is all that it is touted. And Steve Jobs is not the only game in town when it comes to state-of-the-art smart devices.
Posted by Anonymous | January 14, 2009 - 3:16pm
Disagree with carrier loyalty. In these desperate economic times customers are generally focused on value and I believe Sprint and Palm have a tremendous opportunity to exploit this.
Agree with the marketing position on this product though. Sprint has not extended itself with the network value on data nearly enough. Not only is Sprint's overall data & data plans more cost-effective they are clearly more reliable and robust.
Posted by Anonymous | January 14, 2009 - 3:17pm
Consumers in focus groups and opinion surveys across the country say carrier brand trumps device brand the majority of the time. Only two smartphones are the exception: iPhone and Blackberry. Consumers pick iPhone and Blackberry first, then the carrier. That's the standard Pre would have to reach. A high standard built on a cult like following.
Posted by well-informed | January 14, 2009 - 3:19pm
@ anonymous
The "newborn" webOS uses simple XML, CSS, and Java, and therefore many developers will be glad to write apps for this phone. It's a break in the clouds compared to the individualized and new languages they have to learn to write apps for the other arbitrary OS's. And of course it will take a while for the apps to catch up, but it should be quite fast compared to other phones...
Posted by Anonymous | January 14, 2009 - 3:27pm
to well-informed. developers are in the business of making money. when webOs proves itself in the market, developers will write apps for it. not before. do the business math.
Posted by islesfan | January 14, 2009 - 4:41pm
I have been with Sprint for ages and I have used Palm products almost as long. As a result, I am very excited about this Pre. I have worried about what would replace my workhorse Treo 755 when it eventually dies. Now I know.
As for consumer loyalty, there is nothing that could get me to switch from Sprint or Palm short of either going out of business!
Posted by Anonymous | January 14, 2009 - 9:15pm
Great phone. To bad it's coupled with the worst carrier in wireless, Sprint.
What is Palm thinking?
What was Nextel thinking?
What was Clearwire thinking?
What is Cox thinking?
What are Sprints customers thinking? When does my Sprint contract expire....
Posted by Anonymous | January 15, 2009 - 9:37am
Anonymous must be a Verizon employee (9:15pm "Anonymous" that is). Sounds like propaganda to me. If you are a true "Sprint Customer" as you claim, then pay the $150 if your that miserable on the Nation's best, largest and most reliable 3G, and soon to be 4G for at least a two year headstart, network? Voice is all the same across the board with all carriers. Everyone has their share of spotty coverage, but Sprint is the best when it comes to data coverage, speeds and quality.
Posted by Anonymous | January 15, 2009 - 11:28am
Anonymous 9:37 is guessing about VZW ...doesn’t know his facts. There is a difference between assumptions and facts.
And what 4G network - Baltimore and Portland? There is also a difference between fact and fiction.
Sounds like 9:37 is a Sprint zombie - infected by some hallucinogenic contagion.
Posted by J. Smith | January 15, 2009 - 11:57am
From what I can tell without having the phone in my hands, Palm has done a magnificent job of thinking about how a phone is used and designing the Pre's user interface. I am a Palm supporter, having only recently given up my 700p for an HTC Touch (which is a very nice device), but I'm going back to Palm as soon as the Pre is available.
I see a lot of barbs directed at Sprint. I've used them since the 90s. I have rarely dropped a call (even in the high plains of West Texas and New Mexico) and the one billing error I had was quickly resolved. By objective measure they're the best data carrier in the USA, on average they're the fastest, have the best coverage, and most flexible terms of service, and they do not cripple their handsets to the extent that other carriers do. Apparently some people have had a really bad experience with Sprint and can't or won't get over it, but like the earlier poster, islesfan, Sprint has earned my business and I can't imagine going with another carrier.
Posted by Jans | January 15, 2009 - 1:59pm
Here in the nation's capital, no carrier is better in the Metro system than Verizon-- everyone else gets lost & cut off. I have been holding onto my Palm Treo in hopes that Palm would come out with something innovative. Did the EVER with the pre!!! Still, i am not willing to switch over to Sprint because of the phone. Now use having an awesome device if you can't use it or rely on it. Soon as Verizon gets it (i hope), i'll be first in line.
Posted by Mike Dolan | January 15, 2009 - 4:27pm
I believe Verizon has an exclusive deal to provide service on the Washington, DC metro (subway), however there have been murmurs that other carriers may soon get the chance to provide coverage as well.
Posted by Anonymous | January 20, 2009 - 3:05pm
Palm needs to get this released asap and make sure its stable and works like it was demo'd.
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