Analyst roundtable reunion: The last remake of Palm

Warning us in 2005 that the problem before PalmSource was distinguishing Palm OS from being just "good enough" to being outstanding, in the face of new competition from the Treo, was a certain Jupiter Research analyst:

Joe Wilcox, September 27, 2005: I wouldn't say the Treo is exceptional, but it crosses the "good enough" threshold for many people. Another distinguishing feature is the PalmSource software. It's a different operating system than some of the Windows stuff out there -- looks different, feels different. Now we have this Palm device running Windows Mobile software, and there are going to be a lot of devices out there running Windows Mobile software, and as we saw in the Windows space, as demonstrated [there], we may see greater difficulty to differentiate over time.

Most of the devices that Palm ships run PalmSource software. So I think it would be way, way premature to write PalmSource off here. These two companies were one at one time, and they have a long-standing relationship. Just the fact that the Windows Mobile was announced for one device says something about the extent of the commitment. Yes, Palm is licensing Windows Mobile, but it's toe-in-the-water stuff. PalmSource has a whole leg in the water, at least. PalmSource has to make its future clearer now. We just had the acquisition, and then right afterwards, we had the major partner going with a rival's software. So it's now up to PalmSource to really articulate a clear road map for its products, and to begin delivering on some new capabilities as soon as possible. At the least, it wants to hold on to its major licensee, and in the best-case scenario, extend its software to other devices.

Writing for us a few weeks ago, Wilcox suggested the first layer of Palm's problem is one of perception -- a kind of self-fulfilling prophecy that keeps folks from investing in the platform because so many other analysts suggest it's not worth investing in.

"There could be more positive perceptions about Palm, if anyone really looked," Wilcox wrote. "WebOS is simply one of the best smartphone operating systems ever developed. Palm marketing is aggressive and compelling. Then there are the carrier deals, which keep coming with the bad news. Today, Palm announced that AT&T will distribute Palm Pre and Pixi. That puts three of the four major US carriers in Palm's palm. But who is going to buy a Palm smartphone with all the negative crap being said about the company's future? Who wants to buy a product today from a company that might not be around tomorrow?"

Forseeing a convergence in mobile phone operating systems around Linux -- or perhaps an emerging brand in the Linux space -- was NPD analyst Ross Rubin, now the company's executive director of industry analysis for consumer technology. In 2005, Rubin suggested that brands start finding ways to distinguish themselves through applications and functionality, to introduce themselves to the consumer as something of unique value in themselves, as an alternative to dumping themselves onto a collective platform as PC manufacturers did in the 1990s.

Ross Rubin, September 27, 2005: Having Windows Mobile is probably of more interest to enterprises than consumers, but unless there are other benefits that come with that, such as greater stability. I think the difference is getting back to this set of capabilities that many of these operating systems can provide. Unlike in the PC world, where you really had Office driving a lot of Windows sales, because those are the applications people wanted to use, you haven't really gotten that "killer app" for cell phones. To the extent that there are compelling applications, there are a number of ways that those could be brought to the platform. It's not as simple as just having an application on top of an operating system. In the PC world, you have things like Brew, Java. New applications could be delivered over the air. So in some ways, it's a more dynamic environment where the operating system and the application are not as strongly tied together in the real world as they are on the desktop.

Carriers have a vested interest in having a broad portfolio of handsets, with different features. I think also that the nature of mobile phones is that they're more personal than a lot of PC devices are, and again, why do we purchase PCs? It's really to run different applications...I think one way of looking at it is, maybe the best comparison is not necessarily to the PC itself, which has a certain set of features driven by volume in the marketplace, that certain components tend to win out, but really more sort of like the Web. No two Web experiences are really identical. No two Web sites are really identical. I think in many ways, what carriers are looking to do is take that kind of diversity and make it available to consumers through different kinds of applications, and optimizing different kinds of handsets. Carriers certainly have an interest in keeping healthy competition alive among different handset manufacturers.

Speaking with Betanews today, Rubin said much the same thing: He believes the task before Palm is to continue to distinguish itself, to define a clear set of functions and actions that define what a consumer can do with a Palm phone -- to brand the function, not just the device.

Responding to Dr. Purdy's suggestion this morning, Rubin told Betanews, "Yes, Palm could do any number of things to improve the product; a larger screen device would help show off webOS, but the company instead chose to go for a smaller, more comfortable device with a Zen aesthetic resulting in greater differentiation. Palm's enemy is not so much Apple, Google, or Microsoft as it is the clock. As [Palm CEO] Jon Rubinstein has noted, the company needs to reach the scale of large manufacturers to achieve ultimate profitability. It is launching now on multiple carriers, which will help deliver scale, but it is not happening fast enough. This is why so many of the rumored acquirers are large-scale manufacturers -- either in the handset space such as Motorola, RIM, Nokia, or HTC, or primarily outside (Lenovo and Dell). Making changes such as merging webOS with MeeGo -- itself a recently merged operating system with very low volume -- would require a luxury of time and attention Palm doesn't have at the moment."

And responding to my contention that perhaps Sprint may not have been the optimum platform, from a consumer standpoint, on which to launch the new Pre in 2009, Rubin said, "There's little use to Palm in looking back at Sprint in hindsight. Palm played the best hand available to it, and Sprint did support the Pre with extensive promotion. It now has its handsets on the top three of four carriers in the US as well as in Europe, and needs to educate and explain its advantages to the consumer while continuing to court the developer."