I thoroughly enjoyed Eric Savitz‘s Can Anyone Rescue Palm ($PALM) from its Death Spiral in this weekend’s Barron’s.
Savitz goes back just far enough to give readers the quintessential story of a classic failed turnaround. At the end of the day, Palm’s failure is less a story of poor execution and more a story of tough-as-nails competitors like $RIMM and $AAPL.
Palm in the past few months has done many of the things it promised. It expanded from one phone, the Pre, to a second, lower-cost model, the Pixi. After launching service on Sprint (S), it added Verizon Wireless (VZ) as a second carrier and unveiled new versions of the existing phones, the Pre Plus and the Pixi Plus. After a slow start, it now has a steadily expanding number of applications in its equivalent of the Apple App Store. It has added carriers outside the U.S. And it has shelled out big bucks for a splashy advertising campaign.
There’s just one problem: No one is buying the phones.
There are a few questions that weren’t asked or answered in the story that I believe would be of great interest to all investors. These include:
- Why did the sell-side research cadre get behind the company so early? Virtually every major firm was cheering Palm on from the beginning of its latest turnaround – were their buy ratings based on a desire to root for the underdog?
- How did the tech guys get it so wrong? The Pre and Pixi caught on with the gadget guys, so why not the people?
- Can we extrapolate Palm’s dissatisfaction with Verizon’s marketing assistance and figure out just how make-or-break the involvement of a carrier is in terms of tech product launches?
The smartphone market was Palm’s to lose 5 years ago…and they certainly lost it.