Palm Is Already Dead

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!

9 thoughts on “Palm Is Already Dead

  1. Hi Adam. A surprisingly gloomy article but I guess not from a former Palm employee
    What a contrast to the optimism expressed by Jeff Hawkins
    So is his head in the clouds or yours in the sand?

  2. Who knows, we’re probably both wrong.

    If Palm is sold to another company, you can expect another round of “we’re turning the ship around to focus on XXX.” As I mentioned in the article, this has happened numerous times to Palm. From my experience, every time this has occurred, it’s taken a long time to build back momentum in the company.

  3. The reason the company has not innovated for so long is that is was run by idiots for a looong time.

    Palm has their name back, perpetual license for Garnet OS, hiring a bunch of qualified people (a lot of Linux ones too… hmmm)

    I could not feel better about Palm’s future. The right leadership is in place and with Jeff on the board (though not in charge) it is his virtual playground for new ideas. I have a feeling that in May, everyone will be less negative towards Palm when they unveil their “3rd” arm of products.

  4. Docfly

    I also agree….see my post in response to the introduction of the 680

    Also, I always thought that the Palm/Treo smart phones saga is very similar to the Commodore/Amiga disaster. Similar in that you had two companies that sold a great product but they did not keep the product up to date. The management let the competition catch up and steal the market that the original product pioneered. Both products survived past their prime only because of a loyal die-hard base. But only innovation, as you pointed out Tom, will keep a product on top and garner new fans. Hey I wonder if Palms management is comprised of former Commodore employees….Hmmm

  5. Phillip

    Well, Adam, I do agree that Palm has its problems. The best way for them to take care of it is to get away from SOX compliance and focus on their internal problems. The best way is for them to internalize (read: private equity), and fix them. Jeff is a very smart guy, and always has a few cards up his sleeve. I think we’ll see more in the next year.

    Granted, jeff is not in charge, but Ed is, and they’re good friends (Ed is even on the board at Jeff’s new company, Numenta). Plus, Ed knows a LOT about this space, and respects Jeff’s viewpoints.

    I think they have a lot of work to do, but they’re far from dead!

  6. Phil – Thanks for the response. If Palm is to continue, I don’t think getting bought by another company is the right way to go. Rather as you pointed out, the current team is probably the best suited to turning the company around. We’ll see!

  7. Well, i met palm at 17yro . . . i fell in luv, so Palm might be dead or might be in coma, but as a palm fan i fell in negation, i refuse palm 2 be dead….. I just wonder why the hell palm does not wot they need and many palm users need 2 . . . a whole new model, multitaskin, a better graphic interface, at least . . . is it money problems ? licence problems ? or just idiot executives bosses problems ? i just dont understand it. Wot i know, is that ill keep usin palm as mine lasts hehe, seriously . . . as i cant get another os that simple as palm’s os and with that many programs , i think i wont use any other device.

  8. David

    Palm is Dead, Microsoft owns it, and once Microsoft gets ahold of something it tears its claws into it and rips it to pieces, and makes/builds and promotes its own products, why do you think that that the Newer so called palms or treos use Windows Mobile??? huh! and very few use if any the palm OS and the units utilizing the palm OS are shrinking day by day…??? and have not been that good lately?? once again palm is now microsoft’s plaything…

  9. Marcus Lee

    Palm started dying when its merger with Handspring happened in Oct 2004. All Treo 6×0 users know how buggy the Treo 6×0 is, for Palm to go into the merger with Handspring too quickly (before the complaints from all the Treo 6×0 users [especially problem with Treo 600] surface) is one BIG mistake. Another BIG mistake is when Palm started using Windows Mobile as the OS for its device. in Sept 2005. Another BIG mistake is when Palm “neglected” its uniqueness of using both a stylus and touchscreen.

    The fact is the following:
    Treo 600 has design flaw; coverage reception not stable and SMS problem. Customers lose confidence in Palm.
    Treo 650 has design flaw with the coverage reception (rumour says that Palm did nothing to attend to Treo 600 complaints, instead Palm is more concern about making instant profit). More customers lose confidence in Palm.
    Windows Mobile requires more powerful hardware and it hangs very very often in comparing to Palm OS, Symbian and Linux.
    The surface of BlackBerry and the aggressiveness of Symbian and Windows Mobile manufacturers in producing many choices of Mobile Phone PDA devices left Palm in one corner.

    Hence, Palm lose its competitiveness.

    Farewell my dear Palm.

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