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:

Metric

Palm

CAPS stars (5 max)

*

Total ratings

807

Bullish ratings

461

Percent Bulls

57.1%

Bearish ratings

346

Percent Bears

42.9%

Bullish pitches

93

Bearish pitches

82

Data current as of Dec. 29, 2008.

And here's what they think today:

Metric

Palm

CAPS stars (5 max)

*

Total ratings

895

Bullish ratings

492

Percent Bulls

54.9%

Bearish ratings

403

Percent Bears

45.1%

Bullish pitches

103

Bearish pitches

93

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.

Amazon and Apple are Stock Advisor selections. Microsoft and Sprint Nextel are Inside Value picks. Google is a Rule Breakers recommendation. Try any of these Foolish services free for 30 days, with no obligation to subscribe.

Fool contributor Tim Beyers is a member of the Rule Breakers team. He had stock and options positions in Apple and Google at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy hasn't had its coffee yet. (Yawwwwwwwnnnnnnn.)


Read/Post Comments (0) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 808512, ~/Articles/ArticleHandler.aspx, 9/19/2014 5:57:37 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement