Palm’s Salvation? Less Push, More Pull.
Palm’s warning last week of a gruesome fiscal third-quarter revenue shortfall confirmed fears that have haunted the company since it first brought its new webOS handsets to market last year: Neither the Pre nor the Pixi is the “hero” device that commands the consumer attention needed to really turn the company’s fortunes around.
Certainly, Palm’s (PALM) carrier partners haven’t viewed it that way. If they had, Palm wouldn’t be sending hundreds of “Brand Ambassadors” out to Verizon stores in the hopes of juicing sales.
According to Palm CEO Jon Rubinstein, that campaign has met with some success. But it has clearly been hard going against heavily promoted Android devices like the Motorola (MOT) Droid. And it’s only going to get more difficult when Google’s (GOOG) Nexus One smartphone goes live on Verizon (VZ) in the next few months.
So what’s Palm to do? Over at Needham & Company, analyst Charlie Wolf suggests the company redouble its efforts to build out the webOS ecosystem.
“The effort to push the Pre in the carrier channel has not worked because of reluctance of carriers to promote the brand against the Android juggernaut,” Wolf writes. “In our view, then, Palm’s only hope is to adopt a pull strategy; that is, to focus on its software developer program to build a library of compelling applications for the WebOS platform.”
As Wolf sees it, “This effort could prove successful because WebOS’s development tools are already familiar to Web developers; and the developer environment itself is arguably superior to that on Android.”
Worth a shot, right? One of Android’s biggest weaknesses right now is a paucity of good apps. Same thing with Research in Motion’s (RIMM) BlackBerry. If Palm were to drum up some serious developer support and differentiate itself on that level, perhaps it might win a bit more of the market’s attention.
With that and a new gotta-have-it “hero” device, the company might gain at least some of the traction it needs to hold its own in a market that’s being hit with a wave of new Android devices and soon, presumably, a new Apple (AAPL) iPhone as well.
Otherwise, Palm may further languish, or worse. Says Wolf: “Unfortunately, if this [pull] strategy does not work, Palm could be assigned to oblivion.”