The rumors and articles predicting a Palm buyout have only intensified in recent days. What I don’t understand is why any company would consider purchasing Palm. Don’t they already know that it’s been dead for the past five years?
Sure, Palm is still enjoying record sales. In the last fiscal year ending in June 2006, Treo sales topped one billion dollars, with net income over 336 million dollars. How can I argue this point with sales numbers like these? John Lennon’s estate is still making bank, but you won’t be hearing any new songs from him. Palm has been riding the success of its Treo smartphones for the past several years and for far too long. In that time, virtually nothing innovative has come out of the company nor from any of its former incarnations: palmOne, PalmSource, Access, etc. Whither Palm OS 6? A technology that no major manufacturer signed up to use. Garnet OS, née Palm OS 5, hasn’t been updated in five years. When I worked at Palm, I remember hearing that Palm OS 5 was going to shake things up, change things dramatically in the OS for the better. They said that too about Palm OS 4.
One could argue that they’ve succeeded in improving Windows Mobile with the Treo 700w. Well, you can put as much sugar on crap as you like, but it’ll still be crap you’re eating. Just because a company sells hundreds of millions of dollars worth of product doesn’t mean the product is any good. On the other hand, having a good product doesn’t guarantee financial success Take a look at Newton. Great technology, poor sales. Apple is going to try again with the iPhone in June, 2007. We’ll see if the second time is the charm for the company that seems to be doing all the right things lately.
The more I think about it, the more I believe that Palm was the best company to create the iPod a good year before Apple made it happen in 2001. At the time, they had the engineering expertise and global marketing position to be wildly successful. Palm made several critical mistakes:
- Launching new handhelds that weren’t any different from the previous models.
- Developing smartphones and wireless handhelds that couldn’t compete with the competition.
- Purchasing companies left and right without thinking how to properly integrate them with the rest of the company.
- Trying to capitalize on the Internet boom with poorly-planned and managed Internet services.
- Not thinking outside of the box with advanced research and development groups.
I feel sad when I write about some of these mistakes, as I worked on some of these products when I was at Palm. I remember having numerous conversations with co-workers about what’s wrong and how we could change things. I felt powerless, however, to really do anything. Was I completely powerless? Probably not, but I couldn’t see any way to improve the situation given the climate at the top the company. Crisp execution wasn’t what was needed. Better vision and leadership was.
So what if a company buys Palm? The new owner will certainly add dollars to the bottom-line, yet nothing innovative will come out in the years to come. Eventually, the Palm division will become a dead weight, forcing the company to either dissolve or sell the group off to someone else. That seems to be the modus operandi of Palm based on its history. Please, someone stop the record before it starts to repeat again! Is it too late for Palm to reinvent itself like Apple did in the late 90’s? I’m sorry to say, but Palm has been dead for the past five years; the company and the public just don’t realize it yet.
As a matter of disclosure, I have owned and still may own Palm shares. The exact number — if I have any left — is a question I have to answer every year around this time. Palm has experienced so many stock changing events over the past seven years that I’m constantly recalculating what I own and its value. In October, 2002, Palm performed a 20-1 reverse stock split to help raise the perceived value of the stock. A year later, the company spun out into two companies, palmOne and PalmSource. In 2005, Access purchased PalmSource and turned it into a wholly-owned subsidiary and not a publicly traded company. Each of these events has caused me headaches when recalculating the stock’s cost basis!