Friday, March 20, 2009

Palm gets further behind

Yesterday, Palm released their 3rd Quarter results and, to no one's surprise, it is was a difficult period for the once-dominant PDA provider. For the quarter ended Feb 27, 2009, the company had $90 million in sales, well below expectations of about $150 million. The company admits that they are enduring "a challenging transitional period" as they work feverishly on their next model, the Pre.

Certainly, their management is remaining publicly optimistic that they will come out on the other end of this storm in one piece. But unless the Pre is compellingly different from the iPhone, I believe that Palm will end up getting absorbed into Research-in-Motion or Motorola by the end of next year. They have a respectable existing user base, but they seem to be counting on current iPhone users switching to the Pre once their contracts start coming up for renewal this summer. Given the loyalty inspired by Apple's transformational product, this seems to be an unrealistic expectation.

Palm's quarterly announcement: Palm Reports Q3 FY09 Results
Palm, Inc.: PALM (NASDAQ)

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