Palm Is Still Empty-Handed

Even with U2's Bono on its side, Palm (Nasdaq: PALM  ) can't seem to elevate.

New smartphone market-share numbers from comScore show that, of the major U.S. mobile platform suppliers, only Apple (Nasdaq: AAPL  ) and Google (Nasdaq: GOOG  ) gained during the fourth quarter. Research In Motion (Nasdaq: RIMM  ) and Microsoft (Nasdaq: MSFT  ) declined, but Palm was the biggest loser:

Supplier

Sept. 2009*

Dec. 2009*

Change

Research In Motion

42.6%

41.6%

(1.0)

Apple

24.1%

25.3%

1.2

Microsoft

19.0%

18.0%

(1.0)

Palm

8.3%

6.1%

(2.2)

Google

2.5%

5.2%

2.7

Source: comScore MobiLens.
*Share of U.S. smartphone devices.

I'll grant that a 2.2-point slide doesn't sound that bad. But before you brush off this news, consider:

  • Palm only had 8% of the market in September, and
  • The slide occurred in three freaking months.

Do users think so little of the Pre, an interesting device whose webOS is undeniably good? "Good" apparently isn't good enough. An analyst at Piper Jaffray recently told Barron's that Verizon (NYSE: VZ  ) has experienced only "modest" sell-through of Palm's latest Pre and Pixi smartphones.

Looking at the table above, I wonder whether apps are the problem. Apple boasts more than 140,000 apps for the iPhone. Google's Android may be a distant second to that, but there's no doubting the developer interest in the platform.

Where are all the Pre developers? Writing code for the iPhone and Android, apparently. There were only 1,000 Pre apps as of this writing, Webzine Phones Review reports. My guess is that users want more variety.

Now it's your turn to weigh in. Do you think Palm is on the right path with the Pre? Or is the company's developer program badly in need of an overhaul? Make your voice heard using the comments box below.

Microsoft is a Motley Fool Inside Value recommendation, Google is a Rule Breakers selection, and Apple is a Stock Advisor pick. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletters free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He had stock and options positions in Apple and a stock position in Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy is wishing away the snowpocalypse by shopping online for swimwear.


Read/Post Comments (6) | Recommend This Article (3)

Comments from our Foolish Readers

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  • Report this Comment On February 11, 2010, at 2:34 PM, marv08 wrote:

    Well, you are on the right track. WebOS still has more market share than Android, the platform is less fragmented (Android phones run 5 different OS versions by now plus a slew of custom user interfaces on top of it, add greatly differing screen resolutions and button/touch layouts), still, WebOS (having none of these problems at all) development is not picking up at any relevant rate. There are two possible reasons (AFAICS): 1. The SDK is no good, 2. Developers do not believe in the success of the platform. 1. can be addressed, 2. is a death toll.

    The extent of the lag suggests that it is 1. and 2. combined though, and solving 2. is much more urgent. How to send a signal that WebOS is here to stay? The most obvious step would be to roll out new and improved devices BEFORE everybody else (and the hardware does need a lot of improvement). The "plus" models were a joke (people will not sign up for 24 months to get hardware that was introduced 13 months ago) and waiting to again coincide with Apple's new iPhone roll-out in the summer is the safe road to failure. They need to be on the market with at least a two months head start to gain anything, not again 5 days. I am convinced that, if they do not get out new hardware within the next 8 weeks, 2011 will be the end of it. If they have something in the pipeline? I do not know.

  • Report this Comment On February 11, 2010, at 2:42 PM, NorthPierCIO wrote:

    Before you flame Palm based on the comScore report, perhaps you should understand what comScore is actually reporting on. This data is based on ALL active smartphones in the system, NOT a percentage of new sales in Q4. With an average lifecycle of about 2 years that means that we are looking at some old Centros and Treos dropping off of the data (which were offered on all carriers). The new numbers are being watered down by the explosion of new devices in early 2009 when Palm didn’t have any WebOS phones out, and when they only had the Pre on Sprint for the second half.

    Most analysts believe Palm had about a 3-4% share of new smartphone sales when they were just on Sprint...and those were GOOD numbers according to the street. Now that those numbers are tracking into the totals of ALL phones (both new and old) that are being used in the system, ‘The Fools’ act as if this is a problem.

    Even once Palm has their phones on Verizon and AT&T this year, and even if their share of new phone sales climbs to 8% with these new carriers (which would be a homerun for the niche company), comScores numbers won't reflect growth of total EXISTING share until somewhere in 2011 because Treos and Centros will continue to fall of that data.

    Perspective people. Numbers can be misleading (or used to mislead) if you don't understand where they come from.

  • Report this Comment On February 11, 2010, at 6:30 PM, rvwink wrote:

    I found Tim Byers comments disappointing. He wrote:

    "The slide occurred in three freaking months." As if it was a major disaster.

    The facts are that one a company has one primary carrier and one primary smartphone as Palm did in the September, the shipment of smartphones is not linear. Sometimes when Palm makes a big shipment to its carrier it is possible to overstate actually demand. Then in the following quarter, the actual numbers will understate demand.

    If Tim Beyers was following Palm, he would know that Palm warned in their September conference call that shipments would be understated in the November quarter, and that shipments in their February and May quarters would be dramatically higher. This is entirely logical since Verizon is Introducing the Pre and the Pixi in the February quarter followed by AT&T in the May quarter. Palm is going from 1 phone and 1 major carrier in September to 2 phones and 3 major carriers in the May quarter. Isn't this valid information if you are trying to give an objective opinion?

    Finally if you want to state that Verizon shipments of the Pre and Pixi were slow in the first couple of weeks, shouldn't your also state that Verizon spent almost zero money on adverting initially, and the Pre and Pixi were not even featured on their website during January.

    I am disappointed in Tim Beyer's making a mountain out of a mole hill in exaggerating the importance of a statistical drop despite strong evidence that the primary outlook for Palm in the next two quarters is dramatically up.

  • Report this Comment On February 11, 2010, at 10:55 PM, hudsondusters wrote:

    RV and northpier, you are rationalizing.

  • Report this Comment On February 16, 2010, at 6:50 PM, rvwink wrote:

    If you think my comments are inaccurate. Please point out which ideas you don't agree with and why.

    Your statement that I am rationalizing with zero evidence that that is the case is extremely weak.

    I would have hoped that Tim Beyer's would be interested in what people thought of his report, and he would defend himself. But I can't help believing that he purposely had an axe to grind concerning Palm. His point is that Palm is sinking, and he fails to note that all of the analysts and the company itself have predicted that the next two upcoming quarters will show dramatic growth. How does an objective reporter fail to include that information which directly contradicts what he wrote?

  • Report this Comment On February 26, 2010, at 11:32 AM, TMFMileHigh wrote:

    Well, I hate being right about this sort of stuff, but Palm CEO Jon Rubinstein now admits that demand was softer than expected:

    http://blogs.wsj.com/digits/2010/02/25/palm-ceo’s-letter-to-...

    Writing a follow-up commentary on this today.

    Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

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