Palm CEO admits to hitting 'speed bump' with webOS

Palm CEO Jon Rubinstein described the smartphone vendor's current struggles as "disappointing" and "frustrating," but said he remains confident the company can turn things around. He said market chatter around Palm going out of business "defies logic."

Palm CEO JOn RubinsteinIn a wide-ranging and frank interview with Fortune, Rubinstein said that "clearly we've hit a speed bump." However, he said Palm has "tremendous assets," and that its webOS platform is "arguably the best mobile operating system out there." Many analysts have praised the intuitive nature of Palm's software, but the company's devices have failed to catch fire in the smartphone market--both at Sprint Nextel, Palm's first U.S. carrier partner, and at Verizon Wireless, the nation's largest operator.

Indeed, Verizon recently slashed the price of the Palm Pre Plus down to $49.99 and the Pixi Plus down to $29.99, both with a buy-one, get-one-free promotion. When the operator first launched the devices in January, the Pre Plus was $149.99 and the Pixi Plus was $99.99, each with a two-year contract and after a $100 mail-in rebate.

Rubinstein said Palm is working with Verizon to help educate the carrier's retail salespeople on Palm products--to give the devices a chance against other heavily promoted gadgets like Research In Motion BlackBerry devices and those running Google's Android platform. "This is where I think the training is so important in that when someone walks into a store they're going to ask about the different products, and if they don't know about our product, then we don't get a fair shake," he said.

The Palm chief also addressed whether it was a mistake to launch with Sprint in the first place. He said Palm had a long-standing relationship with Sprint, which wanted to do an "aggressive" launch and was "willing to invest significant marketing dollars."

"Now, if I sit today and I kind of roll back the clock and go, OK, now if I could have launched in October with Verizon, and done a shorter exclusive with Sprint, and the world would be completely different today, yeah, I mean, that's easy to say," he said. "But you don't know these things at the time. And Sprint has been a really good partner for Palm. They continue to be a really good partner for Palm."

Rubinstein acknowledged that, with sales weak and dwindling cash reserves, Palm is in a tough spot. "We're going to have to be frugal," he said. "We may not be able to spend the kind of dollars we'd like to spend on things like brand advertising. We're going to have to focus much more on things like viral marketing as we go forward." He did not talk about future products, but said the company continues to "invest very heavily in engineering on both webOS development and on new product development."

For more:
- see this Fortune article
- see this Yahoo News article

Related Articles:
Verizon takes axe to Palm device, service pricing
Palm beats revenue expectations but device sell-through slumps
Verizon drops mail-in requirement for Palm rebate
Palm CEO: Verizon's launch 'below expectations'
Palm cuts revenue forecast, shares plummet