Pixi dust: Is Palm doing enough to survive?

If you're one of those who have been waiting for a miraculous transformation at Palm, I worry you may be waiting forever. As much as I want the company to survive and thrive, to come back from a near-death experience driven by lack of compelling new products and the worst case of corporate ADHD this side of Motorola, I have a growing sick feeling in the pit of my stomach that it's just not going to happen.

This past June (ancient history in this business), I wrote about Palm's prospects as it launched its first webOS-powered smartphone, the Pre. At the time, I expressed optimism that the company had finally shaken its years-long funk to bring out a fresh, modern take on converged, wireless devices. I kept my fingers crossed that this slick new smartphone, packed full of fresh thinking, would help customers get over years of neglect and lost opportunity. Palm, after all, defined the PDA market in the late '90s, and later hit it big with one of the most successful early smartphones, the Treo. I wasn't alone in wishing it could recapture its mojo.

Too little, too late?

But after letting its Palm OS languish on the vine while it merged, spun off, and reorganized more times than any company has a right to, the wireless world moved on and rewarded players with solid product roadmaps and ongoing commitments to introducing new capabilities on a regular basis. I suppose it's too late for Research in Motion and Apple to send Palm a thank you card for handing the smartphone market over on a silver platter.

Now that the Pre has been on sale for a few months and the low-end companion phone, the Pixi, has just been introduced, I'd like to revisit Palm's prospects and see whether things have improved or worsened.

What I said then: Palm needs to quickly move beyond one-carrier exclusivity in any market, and get its products into as many retail channels as possible.

What happened: As of this moment in time, Palm's still stuck with Sprint, but unlike AT&T's two-year (and apparently longer) deal with Apple for iPhone exclusivity, this state of affairs appears to be baselined at six months. If Verizon Wireless moves fast to pick up holiday customers for the Pre the moment Palm's period of internment with Sprint ends, Palm stands a chance of catching customers who may have already expressed interest in the Pre, but who wouldn't dare jump carriers just to get it. As solid a release as the Pre has been, it won't prompt the kind of carrier-jumping that characterized the iPhone's debut with AT&T in 2007. Growing rumors of T-Mobile sniffing around a possible Sprint acquisition only raise the potential for broader market penetration for Palm-branded devices. A GSM-capable Pre can't be ready soon enough.

What I said then: Palm needs to introduce a range of devices and form factors to properly address the fractured state of consumer needs. Apple's decision to stick with a glass-only, single-device range of offerings (selling the old 3G at a discount alongside the newer, faster 3G S doesn't count) makes it vulnerable to vendors who recognize that different users have different requirements.

What happened: Palm just announced the Pixi, a non-sliding model with a full-width QWERTY keyboard, for holiday-season availability. Ostensibly designed to go after low-end consumers who snapped up the Centro in the millions (and maybe even to compete against the Pre with VZW), the speed with which Palm introduced this second device suggests rather strongly that they understand how important it is to keep the product pipeline actively stuffed. The same challenge that doomed the Centro's role as savior is in force here, however: The Pixi will sell at a price point that's simply too low to generate anything approaching acceptable margin. A Pixi purchase gets customers in the door and keeps them connected to the Palm brand, but in and of itself it doesn't drive the bottom line.

What I said then: Palm needs to create a viable developer ecosystem that makes it easy for coders to create and distribute applications to end users. The company must partner with them to help them build active, sustainable businesses selling mobile software.

What happened: Not nearly enough. While Apple's App Store rockets through 75,000 -- and climbing -- titles, and close to 2 billion -- and climbing -- downloads, Palm remains stuck in neutral with a process that seems glacial in comparison. Its Palm App Catalog, which launched with a dozen free apps in June, remains in beta to this day, has added only another dozen titles since, and is only now beginning to support purchased apps. Palm says it is deliberately following a go-slow strategy to avoid potentially embarrassing missteps during the critical early phase of the platform. The company says it's working carefully with developers to ensure broader availability of high quality applications, and will not rush the process just to fill the catalog with titles. However Palm chooses to spin it, the fact remains the company is mired in the gate while its main competition runs away with the prize. It needs to roll the dice if it ever hopes to get back in the game.

Software, not hardware

Three months after the Pre launched Palm into a hopefully new era, I'm still rooting for the underdog and still hoping it can get into gear and learn to compete in a wireless market markedly more brutal than the handheld one it created and dominated over a decade ago. But as we've learned from Apple's iPhone experience, the apps are the thing. Without them, not even the sexiest, highest-performing handheld device on the planet will stand a chance.

Other vendors like RIM, Google, and Nokia are falling all over themselves to straighten out their online application delivery capabilities. Not because they feel they can compete against Apple in terms of numbers -- indeed, no one can, or will, for the foreseeable future -- but because even a relatively paltry few hundred or few thousand titles will cover enough ground to give their respective platforms a fighting chance.

And until Palm gives as much love to its apps as it does its handheld devices, it'll forever be the mobile vendor that squandered a market it virtually owned, then failed to recapture because it thought great hardware alone would be enough.

It isn't.

Carmi Levy is a Canadian-based independent technology analyst and journalist still trying to live down his past life leading help desks and managing projects for large financial services organizations. He comments extensively in a wide range of media, and works closely with clients to help them leverage technology and social media tools and processes to drive their business.