Palm Revamps Image: Delays Being Bought For Patent Scraps

by Matt Klassen on March 17, 2010

I recently reported that Palm had lowered it’s quarterly and yearly earnings  projections on the back of disappointing handset sales, a move that has many speculating the company’s impending doom. But before things get really out of hand, Palm is giving their brand one more kick at the can, and they’re hoping it pays off.

Palm recently unveiled its new advertising campaign centred around the slogan, “Life moves fast, don’t miss a thing.” In an unexpected twist, this new campaign focuses solely on the strengths of the company’s webOS, as its flagship TV commercial shows a woman easily managing her contacts, connections, and multi-tasking various programs without ever showing her talking on or even using an actual Palm handset. (Click here to see the commercial) While at the end of the spot many people may wonder what exactly they are selling, it is clear to analysts that Palm has finally figured out what their greatest strength is, and it’s not their smartphones.

But for Palm, life might be moving a little too fast and they may have already missed everything. The focus on the webOS has stirred up some speculation about what Palm’s next move might be in the mobile market as they struggle to right their sinking ship. Recently, noted Morgan Stanley analyst Ehud Gelblum suggested another option for combating the growing irrelevance of Palm’s mobile devices, stop producing them altogether, and instead license webOS for sale to other mobile manufacturers. “We calculate,” Gelblum writes, “that if Palm licensed its OS for $7 per device and won 5-7 percent of the smartphone market in F2013, this could yield ~$0.40-0.50 earnings per share in F2013.”

While this certainly is a novel way for Palm to increase their revenues, the fact of the matter is that it simply won’t work. The first issue is a matter of competition, and Palm’s webOS has plenty of it. With the meteoric rise of Android’s popularity and Nokia’s Symbian enjoying a firm market share—not to mention the upcoming release of Windows Phone 7—manufacturers have a veritable cornucopia of quality OS options. Is it feasible that webOS could hold its own against these giants? Perhaps if it was able to secure a significant manufacturing deal with a notable hardware developer, but in order to do that Palm would have to tweak its OS to run on non-Palm devices, which it has so far been reluctant to do.

The second issue is a matter of capital and the fact that, unfortunately, Palm has very little. In the latest round of sabre rattling, Apple made it known that Palm might very well end up on its list of patent infringers, and Palm would surely not survive any sort of drawn out legal dispute.

While the extent of Palm’s struggles make recovery a difficult process, many already assume that its only saving grace will be its acquisition by a stronger company who wants what Palm has. But with their handsets failing to make a dent in the market and with their webOS struggling to compete against the more popular operating systems, what does Palm have left to offer anyone? The short answer…patents.

With over 400 patents in the mobile and handset market, the technological advances alone could be enough of a lure for one of the larger companies to scoop up Palm while the price is right. But with Palm executives clearly wanting to avoid such a fate, it remains to be seen whether they can renew their fading brand before they will have to choose between cashing in on the company’s fleeting value or fading away into obscurity.

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Written by: Matt Klassen. >. Follow > by: RSS >, Twitter >, >, or Friendfeed >

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