Nokia Buy Palm? Riiiiight.
by John Paczkowski
Posted on November 13, 2009 at 12:39 PM PT
Palm shares are trading higher today, bolstered by anticipation of the Nov. 15 launch of the Pixi, the company’s second webOS handset and by some silly rumors about a potential takeover by Nokia (NOK). Does the company really need another software platform to add to Symbian, Maemo and Qt? C’mon.
At $12.34, Palm (PALM) is up well over seven percent as I write this, a nice gain that more than offset the four percent drop the company’s shares suffered last week. Clearly, the market is expecting a lot of the Pixi, and according to some analysts, it may get it. In a note to clients Friday, RBC analysts said they “expect positive consumer reception and healthy sell-through,” for the Pixi.
But not everyone agrees with RBC’s cheery assessment. Ashok Kumar, an analyst at Northeast Securities, has a much dimmer view of Palm’s prospects in the months ahead. He says his sell-through checks show a “substantial decline” in recent Pre sales.
“As a fading brand, carriers are likely to see better returns on their promotional and advertising dollars with other vendors,” Kumar writes. “WebOS has negligible smartphone OS share, 0.2 percent per Gartner estimates, and is unlikely to attract any meaningful third-party application support. Palm has bet the farm on webOS and there is a real possibility that they may not achieve critical mass.”
Perhaps. Perhaps not. We’ll see in the months ahead.
Comments
Northwest Analyst Ashok Kumar is wrong
Northwest Analyst Ashok Kumar has just jumped the fence (in his research notes which were reported on November 12, 2009), veering from analyst to pessimist and then to salesman with statements about Palm “as a fading brand, carriers are likely to see better returns on their promotional and advertising dollars with other vendors”. Didn’t we recently read dubious reports about carriers waning interest in Palm, which was promptly rebuffed by Verizon? I know – Mr. Kumar is protected by the word “likely”. But it seems that Mr. Kumar has suddenly waxed bold, and gotten himself into the deep end of Palm bashers. What is troubling is that he is telling carriers to spend their advertising money on other smart phone companies, which sounds stunningly egregious! Thus creating a self-fulfilling prophesy! Now the other end of the spectrum is the Palm enthusiasts, who prognosticate the impending sale of Palm.
Not only are Mr. Kumar’s personal views about the Palm brand unsubstantiated (with a complete lack of data to back him up – “sorry Mr. Kumar, I just like knowing why people think the way they think – is that asking too much?”), he has even delved into territory where data is available (i.e. developer interests in the Palm platform), and has utterly brushed it aside with aplomb, speculating that there is not enough developer interest in the platform. Please note that in fairness to Mr. Kumar, I have not read his full report. I have only gleaned what has been posted through various sources on the web. But his recent research notes cast his net so wide about one single company that it is hard to walk away from Mr. Kumar’s views and see nothing but the suspicious attempt to subvert carrier interest in Palm. Is this how analysts get funding for their pet (i.e. investment) projects?
What does Mr. Kumar know about 3rd party developers?
Mr. Kumar further reportedly stated that Palm is “unlikely to attract any meaningful third-party application support”. Yet on November 5, 2009, PCWorld wrote about Palm that “The company said the SDK [Standard Developer Kit] has been downloaded tens of thousands of times. “ This means that at least 20,000 developers have downloaded the SDK, though the number may be substantially higher.
Palm’s use of JavaScript, HTML, and CSS technologies for WebOS application development are ideal for the millions of website developers using Adobe’s Dreamweaver website development tool. I own an educational company that has thousands of corporate clients; our entire website was built using JavaScript, HTML, and CSS technologies. Our developers, though proficient in Microsoft technologies such as Visual Studio, C#, and ASP, have decided that it will be far more advantageous for us to develop for the Palm WebOS platform before going to the iPhone’s complex and convoluted Objective C development platform; notwithstanding the crowded Apple App Store. One of our developers tried to develop for the iPhone platform but found out that it was a very time consuming process.
Palm’s Ares developer tool – Rapid Application Development
Palm is one of the companies one needs to follow closely in order to appreciate the depth of their innovative culture. Case in point, Palm has just announced a new developer tool called Ares; which will be freely available in December for developing WebOS smart phone applications. Palm’s Ares developer tool comes with an intuitive drag-and-drop computer programming model. Ares provides what is called an Integrated Development Environment (IDE – similar to Microsoft’s Visual Studio) for those familiar with developing applications for languages such as Microsoft’s Visual Basic and C#. Though we are still to download the Palm SDK, yet my company will start developing for the WebOS platform in December 2009. In contrast, one of our developers evaluated developing for the iPhone. He first had to purchase a $700 Apple Mini (their diminutive computer) personal computer and pay $100 to join the Apple developer program. After his initial interests, he has not touched his Apple computer in months (he did not have the time to deal with all of the complexities). But clearly it appears that Mr. Kumar does not know the developer community, a community I have been involved in since the early 1980’s. For many developers, developing for a platform is not just about the market, it is also the complexities, and finally about the cost. Even from a marketing standpoint, there is increasing report that the 10,000 new applications or more being released for the Apple App Store each month is making it increasingly more difficult to make money from the App Store.
The three most exciting mobile platforms to develop applications for at present are arguably Palm WebOS, Android, and the iPhone. Doing development for WebOS, come this December with the release of the Palm Ares development tool, will be orders of magnitude easier than any other smart phone platform. Here again Palm is distinguishing themselves, first WebOS, now Aries!
Mr. Kumar has historically been bearish on Palm, so his views are consistent
In early August 2009, Mr. Kumar reportedly alleged that Palm was cutting production by 500,000 units and that Palm’s “momentum appears to have already peaked.” How can a company that was virtually starting from the ground up, only two months after a new product shipment, suddenly have its momentum peak? This is a company that was on the verge of distributing their products globally in Canada, England, Germany, Spain, Mexico, and more. Palm is the same company some other analysts said would sell no more than 350,000 Palm Pre phones by the end of August, only to later be surprised with the fact that Palm sold over 800,000 phones for the quarter, of which it was estimated that the Palm Pre phone sold approximately 600,000 units. The Palm Pre pricing at competitive retail channels was $199 at inception; while now with the impending release of the new Palm Pixi phone, the Pixi is being advertised at $30 in a competitive retail channel.
Mr. Kumar may not realize that we have lost confidence in channel checks – credibility sorely needs to be restored in this segment of the analyst’s trade. But his other views about branding and developer interest are much more troubling and seriously questionable! And that carrier companies should not put marketing dollars in Palm products is utterly irresponsible. The issue here is about the public getting clear unbiased information about Palm, so that everyone can make informed decisions; though difficult, it is achievable, and it is both the job and responsibility of the analyst.
To end on a high note for Palm, its new Ares developer tool is another indication that just as their stunning unveiling of the WebOS based Palm Pre phone in January 2009, Palm is arguably the most innovative company in the smart phone industry.
Posted by Andrew Augustine at November 13th, 2009 at 7:20 pmIt is not clear if Nokia will go after Palm. But strange things do happen, just look at IBM’s purchase of Lotus Notes, which has made lots of money for Big Blue. While Nokia may now claim it wants to expand its Linux-based OS for its SmartPhone, taking over Palm whose new SmartPhones Pre was actually designed by former Apple engineers who helped design iPhone is certainly a very interesting strategy …
Posted by Stuart Fan at November 13th, 2009 at 8:52 pm