A few weeks ago Palm issued a shareholder statement indicating profits for the year would be “well below” expectations, and as expected, yesterday Palm issued it’s third quarter report indicating that it lost $22 million.
The good news:
The company shipped a total of 960,000 smartphone units during the quarter, representing a 23 percent increase from the second quarter of fiscal year 2010 and an almost 300 percent increase versus the third quarter of fiscal year 2009.
The bad news:
Smartphone sell-through for the third quarter was 408,000 units, down 29 percent from the second quarter of fiscal year 2010 and down 15 percent year-over-year.
According to Jon Rubinstein, Palm’s CEO:
“Our recent underperformance has been very disappointing, but the potential for Palm remains strong. The work we’re doing to improve sales is having an impact, we’re making great progress on future products, and we’re looking forward to upcoming launches with new carrier partners. Most importantly, we have built a unique and highly differentiated platform in webOS, which will provide us with a considerable – and growing – advantage as we move forward.”
Unfortunately for Palm the long term prognosis isn’t that good. The competition in the handheld market is fierce. The market, at one time dominated by Microsoft, RIM, Symbian and Palm is now a very different landscape with Apple, RIM, and Google leading the pack.
From a handset and OS perspective Palm has a competitive product, but, the market is now way beyond a “pretty” OS and phone. The market is about Apps., the customer experience, and all of the other add-ons that the manufacturer offers. For Google it’s the web experience. For Apple it’s about iTunes, the App store, and all of the other Apple elements.
Where can Palm go ?
They are clearly a buy-out target. But for who ?
Perhaps Nokia. Maybe Microsoft. Or, they will just let Palm disappear into oblivion and pick up the patent pieces.