Welcome to Thunderdome, Palm
by John Paczkowski
Posted on September 18, 2009 at 2:22 PM PT
“There’s room for three to five players in this space. We don’t have to beat each other to prosper.”
– Palm CEO Jon Rubinstein
Palm CEO Jon Rubinstein likes to say smart-phone makers “don’t have to beat each other to prosper,” but it’s beginning to look like they–or, rather, Palm–might have to. Because while the Pre may have put Palm (PALM) back in the game, it’s not clear how long it can keep it there. With competition in the emerging smart-phone market ratcheting up as we head into the holidays, some analysts are predicting that Palm’s quarterly sales may decline–sharply.
“[Palm’s] guidance of a sequential decline in revenues in the second quarter implies that Pre sales are not off to the races,” Needham & Co. analyst Charlie Wolf wrote in a research note today. “Although Palm did not say what Pre sales were in the quarter, they appear to have been around 600,000 units, about 100,000 above our estimate. Palm indicated that revenues could fall to $240 million to $270 million in the second quarter, a number that implies that Pre sales could fall to 500,000 units vs. our previous estimate of 750,000 units.”
Interesting that Wolf pegs Pre sales as being above his estimate, since Palm hasn’t yet broken that number out. Indeed, in a conference call with analysts yesterday the company was so quick to dodge questions about Pre sales that I assumed it’s not an impressive number. But if the company really did ship 600,000 units as Wolf contends, that would suggest it’s doing pretty well at market, though certainly not as well as the Apple (AAPL) iPhone or Research in Motion’s (RIMM) BlackBerry. Odd then, that Palm wouldn’t disclose a hard sales number.
“The Pre and its siblings running on Palm’s WebOS software platform appear to be a serious contender in the smartphone market,” Wolf concludes. “But it would be premature at this point to declare it a winner in view of the fact that the smartphone market will shortly be overrun with new phones from Motorola and others running on the Android platform as well as new BlackBerry models in time for the holiday selling season.”
Sure, there might be room for three to five players in the smart-phone space, as Rubinstein claims. But that space is currently occupied at least seven players–Apple, RIM, Nokia (NOK), Motorola (MOT), Samsung, Sony Ericsson and Palm. Which means somebody’s got to go. So while Palm might not have to beat anyone to prosper, it may have to, to survive.
Comments
Without Palm or Sprint providing any numbers, there is a bit too much room for guesswork. The Pre is not an international product yet, and some of the older devices might still do reasonably well. This is certainly anecdotal evidence only, but I do know quite a few Palm users who neither want a touch screen device, nor do they want to give up on the apps they have invested in and damand the possibility to sync with a computer locally. Not everybody wants to sync over Google / the Cloud.
IMHO the really bad news from these quarterly results was that 30% decline in shipped units year-over-year. Especially since Palm’s line-up 12 months ago was nothing to write home about and pretty dated already. Several investors have certainly hoped that shipments were going up after all that hype or at least stay flat.
Posted by Uwe Rueckeshaeuser at September 18th, 2009 at 2:58 pmIt’s a zero-sum game. I don’t walk around with two phones, do you? Maybe Palm should consider licensing webos to other makers.
Posted by Bjorn Tipling at September 18th, 2009 at 3:02 pm