News Brief: Has Palm Read its Own Fortune?



    LONDON, ON, March 22 /CNW/ - Current speculation surrounding a possible
buyout of Palm illustrates the risks associated with complacency in the
fast-moving mobile market, says Info-Tech Research Group.
    "Palm has recognized that its brand equity is eroding quickly and that it
won't be able to ride the Treo's wave of success for much longer," said Carmi
Levy, senior research analyst with Info-Tech Research Group. "Palm squandered
its early lead in the PDA space with misguided investments in internal
organizational changes and now realizes that it has run out of time and
options. The company has nowhere else to go, and is already becoming
yesterday's news".
    The company focused too heavily on internal organizational changes in its
infancy, including buying Handspring, selling off the operating system (OS)
division, rebranding and most recently licensing the OS back. As a result it
held on to limited-function PDAs for too long and missed the industry's
transition to enterprise-capable converged devices, ultimately placing itself
out of the market.
    "Taking their eye off product and feature development while focusing on
internal issues was short-sighted. Even today, Palm's current platform relies
on an OS that is significantly obsolete. With no roadmap in sight to address
shortcomings in multitasking, enterprise-friendly connectivity and security
capabilities, it is clear that an independent Palm will continue to fall
behind competitors that are offering robust mobile devices like Motorola,
Nokia and RIM," noted Levy.
    According to recent news reports, potential suitors of Palm include
Motorola, Nokia and private equity firms. Info-Tech Research Group believes
the best logical fit at this time is Motorola because adding Palm's Treo-based
offerings to its handheld line would give it additional capability in the
higher-margin upper end of the smartphone market in which it's falling behind.
Nokia is the number two in terms of complementary fit, as Palm would provide a
ready-made advantage to increase traction in North America's emerging
smartphone market. Levy notes that private equity firms may not offer Palm the
best vendor partnership it needs to salvage its established Treo brand.
    Palm's Q3 earnings announcement is slated for later today and will be
watched with interest in the industry.

    About Info-Tech Research Group

    With a paid membership of over 20,000 worldwide, Info-Tech Research Group
(www.infotech.com) is the global leader in providing tactical, practical
Information Technology research and analysis. It is one of North America's
fastest growing full-service IT analyst firms.




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