Palm CEO Circa 2006: Apple Win in the Smartphone Sector? Never Gonna Happen

Looks like Palm (PALM) will end 2008 much the way it ended 2007, with layoffs.

After market close Monday, the downtrodden handset maker warned that sales for its fiscal second quarter will come in well below expectations. “We are seeing unprecedented dynamics in the global markets as economic uncertainty hampers demand for consumer products,” Palm CEO Ed Colligan said in a statement. “In order to ensure Palm’s long-term success during these uncertain times, we’re taking several steps to significantly reduce our cost structure.” First among those steps: layoffs–just in time for the holidays.

Palm blamed its dire straits on “reduced demand for maturing smartphone and handheld products,” which is apparently a handy euphemism for “reduced demand for Palm products.” Because demand for RIM’s (RIMM) Blackberry and Apple’s iPhone seems to be holding up pretty well during this period of economic uncertainty. Apple (AAPL) is, after all, now the world’s third-largest mobile phone supplier in terms of revenue.

Which reminds me of a funny story. Asked in 2006 about rumors that Apple was developing a smartphone, Palm’s Colligan scoffed at the idea. “We’ve learned and struggled for a few years here figuring out how to make a decent phone,” he said. “PC guys are not going to just figure this out. They’re not going to just walk in.”