Palm Pre-vents Doomsday

Palm (NASDAQ:PALM) met the challenge I and others put before it at last week's Consumer Electronics Show.

"If the history of mobile computing tells us anything, it's that neither hardware, nor software, but the whole product matters most. A closed system, self-contained and elegantly designed. Ship anything less, Palm, and this Nova will burn you," I wrote.

A closed system, self-contained and elegantly designed, only partially describes the new Pre smartphone that Palm announced at a press conference last Thursday. But if my first impressions are correct, it's exactly the medicine a sick Palm needs.

Big-money investors agree. They've bought tens of millions of shares since Palm went public with its plan. The stock doubled from last Wednesday's close before falling back this afternoon.

Taking rivals to multi-task
The Pre is distinguished by its software, a new operating system called webOS that's built atop Linux using common Web protocols. That design does mean that Palm decided against a completely closed system; more on that in a bit.

First, let's talk about what the Pre can do. WebOS treats each program present on the Pre as a card in a deck, which means that users can open multiple applications, then swipe between them. Here's a better view of how it works, courtesy of the tech blog Engadget. Go ahead, click; I'll wait.

Impressed? You should be. Apple (NASDAQ:AAPL), which arguably set a standard for interface design with the iPhone, doesn't yet feature this sort of multitasking. Google's (NASDAQ:GOOG) Android does, but not as elegantly as webOS.

A monstrous mash-up
Application design may also prove easier, thanks to one of the admitted advantages of open standards. "All WebOS apps will basically be widgets -- HTML, CSS, XML. Easy to code. Pandora got their app to WebOS in only 3 days," reader Matt Bramanti wrote in a response to a poll I posted to Twitter.

Pandora confirmed Bramanti's claim during Palm's announcement. If its experience proves common, it could be extremely attractive to developers who've populated the iTunes App Store with more than 10,000 programs as of this writing.

Don't be surprised if those developers flock to webOS next. Some of the Web's finest already have. There's Pandora, of course, but other high-profile partners include Google, Amazon.com (NASDAQ:AMZN), and social-networking superstar Facebook, whose app already lives on both the iPhone and Research In Motion's (NASDAQ:RIMM) BlackBerry.

Palm's own tools suggest the power and pliability of the underlying OS. A feature known as Synergy unifies data from Microsoft's (NASDAQ:MSFT) popular Outlook calendar with events you track in Google Calendar or Facebook. Synergy can also synchronize contact information.

In some ways, Synergy exemplifies the Web at its best -- information from open sources mashed together to create something better. You might say Palm's trying to beat Apple at its own game.

Answering the call
Can the strategy work? Our 125,000-strong Motley Fool CAPS community is mixed. Here's what they thought before the Pre announcement:

Data current as of Dec. 29, 2008.

And here's what they think today:

Data current as of Jan. 12, 2009.

The percentage of bullish investors in the CAPS community has actually gone down since the announcement; not enough of them believe the Pre has it what it takes to beat the iPhone. "Despite the tweaks/improvements, it's just another iPhone touch clone. No phone can stand out riding on Apple's coattails," wrote Jacob Roche, another reader who responded to my Twitter poll.

Fair point. I like the Pre; I think has the potential to be a serious competitor to the iPhone. But there are two problems. First, thousands of Palm OS applications already exist. There's no clear upgrade path for that software as of this writing. Nor is there any hint of a store, although common sense and earlier announcements suggest that there will be such an outlet for webOS software.

Second -- and worse -- is the timing. Palm expects the Pre to be available through Sprint Nextel (NYSE:S) in the "first half of 2009," CEO Ed Colligan told reporters during the press conference. But that could mean February or June or anywhere in between; we just don't know at this point. Not good.

Today, the Pre is a contender. In six months, it may not be. Hurry, Palm. This opening won't last long.