Palm's Survival At Stake

Palm caught a second wind last year when they released the long awaited successor to Palm OS 5. WebOS got an immediate fan base before the first device shipped and investors cheered the handset maker. A year later though, things aren't looking quite as bright.Palm opened 2009 at $3.12 per share and rose nearly six-fold to $18.09 in the heady summer days of 2009. Device sales though haven't been as high as expected, and as Eric Zeman reported late Wednesday, Palm continues to lose share, even after releasing a new device, the Pixi, and launching on the Verizon network.

MarketWatch released a report that investors are shedding their shares. At the time of the report, the stock was at $6.34, and just two weeks later, shares are down another 10% at a time when the overall market has risen 2%. In fact, the tech-heavy NASDAQ is up over 4% in the same time frame. Clearly someone is dumping Palm's shares in the face of a bleak, or at least uncertain future.

The report goes on to say that Palm's WebOS may survive in the event of a buyout. Personally, I don't see it. There are, in my opinion, too many mobile platforms as it is. WebOS faces an uphill battle. It started out with no users and no apps. Nine months after release, it has the fewest users and fewest apps of all of the mobile platforms. Apple and RIM own the market and Android has seen explosive growth.

Microsoft...well, Microsoft is in an interesting position. It too has a new platform that has zero users and zero apps. Where Windows Phone 7 Series differs from WebOS is it has a much better developer story. It also has some instant synergies with Windows 7, X-Box and Zune. It also has the potential of Microsoft's war chest of cash. Despite all of that, unless WinPho 7 gets more enthusiasm and support from Microsoft itself than Windows Mobile 6.x did, none of the other stuff matters.

Back to Palm though, I'm not hearing rumors of WebOS 2.0, seeing snapshots of top secret hardware, nor hearing of users clamoring for the current devices from T-Mobile or AT&T. The future for WebOS and Palm isn't looking too bright.

If nothing else, this should be a lesson for anyone with a new platform, something that Microsoft should learn, as well as Samsung with their Bada platform. You need more than just a really cool OS to make it work.