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Is there hope for Palm in the 2010 smartphone wars?

With 2010 upon us, it seems like we know what to expect from most players in the smartphone market. Apple will iterate on the iPhone to compete with the bleeding edge Android phones (and possibly give us a 3G enabled tablet in the process), we’ll see more Android phones than ever come out, and Microsoft is due to roll out Windows Mobile 7 at some point. But we’ve yet to hear much about 2010 from the company that arguably garnered the most smartphone buzz in early 2009: Palm.

A recent GigaOm post points out the many problems Palm is facing right now – a lack of consumer and developer awareness, vast amounts of money wasted on ineffective marketing, and being limited to Sprint’s small customer base. Clearly, Palm is going to have to pull off another amazing comeback in 2010 if they actually want to survive against increasingly capable competitors.

What follows is an exploration of what went wrong for Palm in 2009 after their astonishing CES performance, and what they need to do remain relevant throughout the next year.

The Pre reveal and early-2009 hype cycle

CES 2009 was good to Palm. Their press event, in which they revealed the Pre and Web OS, was the first glimpse the world got of a mobile platform that could actually best the iPhone in many ways, instead of just imitate it. With Web OS’s card-based UI, focus on multi-tasking, and its ability to consolidate data from multiple sources, Palm sold us on an evolutionary paradigm for mobile computing. In doing so, they started a hype cycle that would last well throughout the beginning of 2009. (That the Pre was a also sexy little beast, with a curved and Apple-inspired design, didn’t hurt either.)

Palm commanded the CES spotlight; not just because they were revealing a groundbreaking new mobile platform, but also due to the fact that Android’s CES presence was pretty much non-existent, and it would be months before Apple announced details on the iPhone 3GS. In more ways than one, Palm’s competitors left a vacuum in the mobile space that was easily filled by the miraculous tale of a comeback kid.

So what went wrong?

It all started with the build-up to the Pre’s release. Out of CES, tech geeks were scraping up every little bit of Pre news that they could – not unlike the typical frenzy surrounding a new Apple product. But then months went by and we heard nothing. Finally, in mid-May we learned that the Pre was going to be released on June 6th for $200 (after a $100 mail-in rebate). Up until that May announcement, Palm did little to fan excitement among the tech blogosphere or mainstream consumers. This left them only a few weeks to build general awareness for the Pre. By that point many were also looking forward to Apple’s June Worldwide Developer Conference, where they would be unveiling the latest iPhone model.

The Pre launch, and short-lived succes

The Pre’s launch ended up breaking Sprint sales records over its first weekend, but unfortunately that success was not meant to last. On June 8th, a mere two days after the Pre’s launch, Apple announced the iPhone 3GS. It wasn’t a groundbreaking upgrade – but the addition of video recording, an autofocus camera, and a faster processor, was significant enough to make many looking forward to the Pre have second thoughts.

I’ll admit, I was among them. I held out on jumping on the iPhone bandwagon since its launch, and at the time, the Pre was the first phone that looked like it could compete with the iPhone on both a software and hardware level. I was loving everything I heard about the Pre something fierce – that is, up until the point I actually held one. While the device was gorgeous and truly one of a kind, I quickly realized I would never be able to live with the Pre’s cramped keyboard. That sad reality, coupled with Palm’s app developer troubles and the iPhone 3GS’s improvements, ultimately drove me to Apple’s domain.

After the launch of the 3GS in the middle of June, Pre sales slowed measurably. Palm’s inability to release the Pre earlier was among their bigger mistakes in 2009. The Pre had only a few days after its launch before it was overshadowed by news of the iPhone 3GS. If Palm had managed to release the phone even a month earlier, it probably would have helped the Pre quite a bit. (Then again, Apple might have released 3GS details even earlier to compete.)

Palm never did manage to regather enthusiasm for the Pre after the iPhone 3GS launch. Instead, the focus shifted to the cheaper and cuter Pixi, which was released in mid-November. Unfortunately for Palm, the Pixi ended up being an underpowered device that lacked some key features (no Wi-Fi?!). The device was also a hard sell because the Pre was available for not much more than the Pixi’s $99 retail price via many outlets.

Android’s knockout punch

Let’s not forget Android’s late-2009 resurgence with the release of the Droid and Droid Eris in early November. Once again, Palm was too late to the game with their release, and any impact the Pixi might have had a few months prior was reduced to nil by mid-November. And not only were both Droid phones more impressive pieces of hardware than either the Pre or Pixi, they were also on the much larger Verizon network.

I’ve written about how the Droid was a monumental shift for Android previously on Royal Pingdom, and I also took that opportunity to discuss how much of 2009 was a wasted year for Android. By the end of the year, however, the tables had turned, and it was Palm that was being overshadowed by the Droid’s massive anti-Apple marketing campaign. And now that the entire tech world is looking forward to Google’s Android phone, the Nexus One, Palm will have to work even harder to impress us in 2010.

2010: Palm’s most crucial year ever

It has been said many times that Palm has bet the company on the Pre and Web OS. After refusing to innovate for so many years, they’re now left playing catch-up to the Blackberry, iPhone, and Android. But despite the early buzz for the Pre, their 2009 sales weren’t exactly killer. This makes 2010 all the more important for Palm; either they manage to build a device that can truly make Web OS shine and turn public attention away from their competitors, or they quickly fall into a pit of irrelevance.

If Palm fails to gain further ground in the smartphone market in 2010, there’s little chance they’ll be able to stay in business for much longer. They won’t disappear completely; most likely another company will buy them out and try to implement Web OS on their own hardware. RIM is the most likely candidate. A device that combines Web OS’s usability with RIM’s legendary e-mail and messaging support would truly be something to behold. I don’t think that Microsoft would ever want to buy Palm (despite what some people think), because they’d have little idea what to do with it. Google is another potential candidate, but I think there’s very little they’d gain from owning Palm.

Palm will be hosting a press event on January 7th at CES, so we’ll soon learn what their plans are for 2010. We’ll of course be seeing new hardware, but there’s also buzz floating around that they will be jumping to Verizon for the Pre successor. Palm desperately needs to have a presence on a network other than Sprint, and Verizon is by far the smartest choice.

In terms of hardware, I’m thinking we’ll be seeing more than just a revamped Pre. What Palm needs is a powerful phone that will appeal to business users, compete with all of the new Android phones, and innovate in a way that will get people buzzing. And most importantly, the device needs to finally replace the aging Windows Mobile-based Treo Pro.

Palm also hasn’t been very cooperative with developers, and subsequently they only have 1000 apps available in their App Catalog. With the recent announcement of Project Ares – an in-browser Web OS developer environment – it appears that they’ve learned from their mistakes, and are attempting to make programming for Web OS easier than ever. Palm has also stated that they’re looking to launch a “full developer program” at CES, so perhaps they’re also working on other ways to tempt developers.

Wrapping up

2009 has been a roller coaster year for Palm. Even if the Pre wasn’t nearly as successful as they would have liked, the fact that it exists is a reminder that the company still has a pulse. Time will tell if they can follow up with their good effort in ’09 with something truly remarkable in 2010.

I’m not entirely sure what makes Palm’s story so compelling. Perhaps it’s nostalgia. I remember working at Office Max in the late ’90s when Palm Pilots were all the rage. I remember holding a Palm V in my hand, and thinking it was the height of mobile computing. Mostly, I remember that they were there at the beginning of mobile computing. Despite being lazy for a good portion of this decade, I think Palm still has much to offer. I just hope they stick around long enough to show us.

About the author:
Devindra Hardawar is a tech/film blogger and podcast host. You can find him writing at the Far Side of Tech and Slashfilm.

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