neutrino23

Why Apple Isn't Making iTunes Available for the Palm Pre

First of all, Apple can't formally allow Pre to sync to iTunes as that becomes a liability. They are now responsible for providing this service and if they do it for Pre they do it for everyone. I see no way Apple can do this.

Second, I agree with James Katt. There are other ways Palm could have gotten iTunes content onto the Pre without pretending to be an iPod. This would not have put them at odds with Apple.

Did Apple Steal the Palm Pre’s Thunder?

AT&T charges what the market will bear. It may seem high but that is what people are willing to pay.

Palm is lucky in that they can sell to Sprint without much competition, yet. They may have enough breathing room to establish a niche. Time will tell if poor handset quality and poor sales will sink them.

It's All About the Apple Ecosystem

Focusing on the ecosystem is very important when trying to understand Apple. Too often pundits focus on particular qualities of some Apple product such as number of megabytes or pixels and they miss the bigger picture. Unlike most other companies Apple is not just building widgets, it is building an ecosystem, as you describe.

Even now there are many blogs out there criticizing the new iPhone because it lacks one or another hardware feature. What they miss is that iPhone is more like a passport than a piece of hardware. Buying an iPhone gains one access to the connectivity of all the other Apple products, access to music and videos through the iTunes Store and access to the work of thousands of developers as well. All of that at your fingertips.

This is an enormous barrier to entry for almost any competitor. It is not about a physical keyboard, a removable battery or an OLED screen. Apple's strength is in this complex web of content and hardware and mindshare. The announcement that they were opening up the dock connector for accessories and Bluetooth for peer to peer communication was huge. This added another dimension to the Apple ecosystem.

I have no idea why Apple decided to only charge $29 for SL. That is a real puzzle. It will be interesting to see how that plays out.

The Palm Pre's Coming Out Party

The Pre syncs with iTunes by mimicking an Apple product. They will either get sued for this or Apple will modify their code to break this or both. I'm skeptical Palm can do well enough. They are entering a maturing market and they are betting the company on one product. Apple will soon release their third generation phone, RIMM has also worked through multiple generations. RIMM has much of corporate America in its corner. Apple has over 200 retail stores across the US, each with a genius bar where customers can get service and free help. RIMM and Apple have deep pockets. Palm is running on fumes. If there is any trouble with this release Palm could go under.

Wild prediction: early next year Palm is acquired by beleaguered Dell as it searches for a way to make money.

Does Palm's Pre Have Anything on the iPhone or Storm?

What if an asteroid falls on Palm headquarters? Would that improve Nokia sales? What if three comets hit the earth simultaneously and land on Palm, RIMM and Nokia headquarters? Would that be good for Apple? What if, what if, what if. Sheesh.

By talking about Apple selling as a fad or trend you display your lack of understanding of this market. You can like Apple or not but at least understand their strengths and weaknesses properly. The same goes for RIMM and Nokia and Android.

Personally, I think Pre is in an extremely difficult position. Pre might be a good phone. The problem is it has to be an extraordinarily good phone to overcome the lead established by RIMM and Apple. If they had come out with this three years ago they would have walked away with the market. Now they are an also ran.

Yes, they can quickly get some share from the technically oriented people who follow this market, but it doesn't sound like Pre will add a must have feature not offered by RIMM or Apple. This is not a knock on Palm, it is just how it is.

I recall having this discussion with a broker promoting the stock of a company pushing a technology to compete with hard disk drives. My point was that it would have to be hugely faster/cheaper/bigger than hard drives in order to gain a foothold. Just like magnetic bubble memory before that. Bubble memory was interesting but could never develop fast enough to catch up to hard drives so they ran out of development money before the hard drive developers ran out of money. Apple has almost $30B in reserves. If they decide there is something missing from the iPhone that is needed to keep market share you better believe it will appear very quickly.

I think Palm will make a short term splash then disappear from the headlines. Apple/RIMM will capture most of the headlines. What is Palm going to do? Build up several hundred stores in malls across the US where trained technicians can help people with questions? Build a huge on line music and video store like iTMS? Get thousands of developers to write tens of thousands of apps for the Pre? Develop a simple way for developers to get paid for developing apps? Find a way for the Pre to synchronize with your iTunes collection on your computer? Somehow get the whole country talking about Palm so that when they think touchscreen phone they think Pre and not iPhone?

Perhaps I don't know enough about Pre (mea culpa), but I think they should have gone after a specific niche rather than the general market or in addition to the general market. For example, they might have worked out a scheme to develop the digital hospital. EMTs in the ambulance could forward diagnostic information to the hospital. Doctors and nurses and other techs would receive this on their phones. Each would begin the necessary preparations and would send updates about their progress to the others. Once the patient arrives information about medications, treatments and diet would skip from phone to phone so everyone is always up to date. For all I know something like this exists. But if Palm did something like this, perhaps in another field, they'd have a secure toe-hold from which to expand. As it is they seem very exposed to intense competition.

Palm's Pre: Likely to Break

I think Palm is facing a very steep hill in front of them. If they had come out with this device two years ago they would have a much better chance of success. The problem is now Apple and RIMM have firmly established themselves as market leaders. Android is also around collecting some interest. Apple has been very disciplined. They came out with the basic iPhone and have gradually added features since then. They now have two years experience and something like 30 million customers (including iPod touch). In June they'll come out with version 3.0 software and a new phone. Palm has to jump into this with something substantially better in order to get much press. No knock on Palm, I wish them well, but I am very skeptical that they can succeed.

The best thing they have going for them is that the iPhone is not available on Sprint.

Apple: Three Battles Won, Nicely Positioned for the Fourth

If you look at the distribution of Walmart stores you see they tend to be where Apple stores are not. Selling through Walmart is a way to reach more customers without cannibalizing sales at Apple stores.

On top of Apple posting a great quarter, they are preparing for a great year of product releases.

First comes new iPhone hardware and software, then comes Snow Leopard, then comes the mystery touch screen device, then at the end of the year we might see new laptops when Intel updates their CPU line. All in all a busy year.

Does Palm's Pre Have a Chance Against the iPhone?

It may have a chance. It depends on where the bar is set. I doubt seriously it will have anywhere near the impact of the iPhone or BB. There is not enough infrastructure. On the other hand, this is a huge market. Sprint doesn't handle the iPhone so for those wishing to use Sprint they have a chance. It is not clear how long they can survive, but that is another matter. Do they have deep enough pockets to maintain the level of innovation needed to keep up with competitors?

Apple's New iPhone Could Crash Palm's Pre Release Party

Palm is in a very difficult position. Two years ago would have been a great time to bring out the Pre. If it was just a matter of the product itself they might have a chance. Kind of like comparing different burgers. You make a better tasting burger and people will buy it. With smart phones there is a whole ecosystem of developers, apps, accessories (speakers, headphones, cases), online music store, app store. Now Apple has over 30 million customers for the iPhone and iPod touch. That is a huge critical mass that is a customer draw in itself. If you are an iPhone user and you have some peripherals and some apps and some songs from iTunes what incentive do you have to switch to a Pre? The Pre need not be just a little better, it has to be hugely better right out of the gate to draw a significant fraction of existing customers away from their phones. The one thing Palm has going for them is that the iPhone is exclusive with ATT.

AAPL Smartphone Shows the Way to Competitors

It is a complex issue. Without question Apple has the better product and, as pointed out above, has the depth of engineering and design IP to keep turning out new products for the foreseeable future.

Yes competitors can try to copy some features but that is like driving by looking in the rear view mirror. Your future products are determined by what Apple brought out last quarter.

The one fly in the ointment could be the "good enough" effect. That is where people admit you have by far the better product but the cheaper, poorer one is "good enough" for them. As closely as Apple follows their customers I doubt this will catch them by surprise.