iPhone and Blackberry take their deadly toll on Palm

Posted by Aharon Etengoff

Shares of Palm plummeted on Friday as the mobile phone manufacturer warned revenue for the current quarter would total far less than Wall Street had originally expected.

Indeed, Palm has apparently been unable to compete against Apple's ubiquitous iPhone and RIM's sleek Blackberry, as it only managed to sell 408,000 smartphone devices out of 960,000 units shipped. 

"Our recent underperformance has been extremely disappointing to me personally and the entire Palm team," Palm CEO Jon Rubinstein said during a conference call cited by BusinessWeek.

"We're very realistic about our near-term challenges, but the issues we're facing are far from insurmountable."

However, an Enderle Group analyst told TG Daily that Palm's chances of seriously competing against Apple, RIM and Android were almost nonexistent.

"Of course, anything is possible, but Palm's chances of effectively competing against Apple, Android [and RIM's Blackberry] are increasingly unlikely. The company burned through so much of its financial resources and did quite poorly with the Pre. It is much more likely that they will be acquired now," explained Rob Enderle.

"To compete in the marketplace, Palm will require lots of money and investors are unlikely to throw good money after bad. If Palm had done a better job with its Pre, that might have changed things, but they did so poorly and investors are likely to be quite nervous."

Enderle added that Palm had further complicated matters by initially picking an even "worse carrier" than AT&T.

"Palm had a really good Pre demo at CES, but a bad launch and a carrier that is even worse than AT&T - Sprint. Plus they had a marketing program that was essentially high functioning with very poor execution," said Enderle.

"There is nothing wrong with the Pre, it is actually a nice product, but their execution was just horrid, from marketing to carrier - it was almost suicidal."