Palm Ready to Fade into the Sunset

Competition has intensified in the smartphone space, with industry Behemoths Apple and Google gaining market share. Their emergence seems to sound the death knell for Palm, which has struggled to keep pace with recent market changes.Bloomberg reported that Palm is in the process of seeking buyers for the company with a couple of Asian firm, HTC and Lenovo, possibly having interest. Once the undisputed market leader, Palm has struggled recently to maintain its market share and now has about five percent share in the US. The company was hoping for more and put significant time and effort into the Palm Pre and Pixi phones that were announced near the end of 2008. The products received favorable reviews for their design and feature sets, however, sales have been lukewarm even after Palm slashed pricing. The company expects to earn $150 million in the current quarter, about half of what was anticipated when the new products were being hyped. The vendor has rapidly been burning through its cash reserves, so a sale seems like its best option.

In business since 1992, Palm had weathered many corporate and industry changes. The firm was purchased by US Robotics, which in turn was acquired by 3Com. Palm was eventually spun out, and later split into separate hardware and software companies. The company has been meandering along as one of the markets top five or so vendors. When Apple changed the focus of handheld systems from hardware to software, Palm  like others  tried to follow suit. Googles emergence put more pressure on Palm to perform. However, the vendor seemed to lag a step or two behind competitors and will now pay the ultimate price.

For those small and medium companies that have standardized on Palm products, the change will create concern. It is not clear at the moment who will buy the company or how they might try to leverage Palms assets. The customers can hope for a migration path to a more viable long term platform from the new owner but they also need to realize that they may be saddled with devices at the end of their life cycle.