Can Rubinstein reboot Palm?

Will Palm's new Pre and Web OS be enough to regain market share?

At CES today, Palm pinned its hopes of a turnaround on a newly announced WebOS platform (previously known by the code name Nova) and a forthcoming smartphone called the Palm Pre. The phone has a large touchscreen area like the iPhone, but with a slide-down keyboard.

While Palm's low-end $99 Centro had been doing quite well, selling more than 2 million units by August, Palm's sales plummeted in recent months, down 45 percent year over year, finishing its second quarter at the end of November with a loss of $500 million including tax charges. The stock has been in a freefall until today's news.

While the Palm Pre has some interesting new features (consolidated mail/messaging, universal search across apps, multi-tasking Linux-based OS, 3-megapixel camera with flash, wireless charger), a lot of it is catching up to innovations that have enabled the iPhone and the BlackBerry to leave Palm in the dust in recent years. The Pre will be available on Sprint's EvDO 3G network, supports Wi-Fi, and has a micro-USB port, 8GB of memory, a touchscreen with gesture commands, and a removable battery. It's expected in the first half of 2009; pricing has not been announced.

Chairman Jon Rubinstein, who joined Palm more than a year ago from Apple, is betting that the ease of use and integration of the OS can outdo his former company. The two biggest things Apple has going for it are the ease of use and breadth of third-party applications. Rubinstein has his work cut out for him if Palm is going to catch up.

As the New York Times noted:

"Their hurdle is substantial," said Roger Entner, a telecommunications industry analyst at Nielsen. He said that Palm's reputation had faded, and that more people returned its smartphones after purchase than those of any other device maker. "For Palm to have a good chance, or even a decent chance, everyone who sees the new operating system and new device has to be raving about them," Mr. Entner said.

Despite the challenges, if Palm gets the OS and devices right, they could tap into a rapidly growing market. And I'm still rooting for them.

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