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A few words on PALM

|Includes: BB, DELL, HP, MSFT, NOK, Palm, Inc. (PALM), S, VZ
I remember one of my friends said investing in PALM is like venture capital. He is right not only from the past week's stock action, but also the biggest PALM backer Elevation Partner is a private equity/venture capital (people who can afford to lose). My problem was I forgot about it when I heard all the noises from analysts (and I thought they are helping short sellers). 

Verizon launch
The recent problem appears caused by the lackluster Verizon launch. Palm CEO Jon Rubinstein kind of mentioned it in press release (or internal memo). He also admit some problem caused by Palm itself. I think both are right. VZ spent $100 mil on Droid launch, according to analyst. Palm/VZ did not do a good marketing job with a small budget. But ultimately it's PALM's problem: from product quality, marketing and support. 

Back in last June/July Sprint launch, Palm Pre is basically a crap, in terms of build quality. A lot of returns and exchanges. The last thing Carrier Sales rep (who works for commission) is customer comes back for return: taking away their time, and bring down their reputation. Now build quality problem is largely solved, but software update is still not perfect, and performance is sluggish from time to time. These problems continue to plague Pre and Pixi, both at S and VZ.

Bigger picture
Smart phone market is cut throat competitive at this time. iPhone and BB continue to be popular. Nokia is popular outside US. Google entered the race with Android (which developed for a few years) and boat loads of cash (and followers like Motorola and HTC). Last but not least, Mr. Softie (Microsoft) and Nokia are not backing down, they are working on next generation smart phones. All those guys can afford to throw a lot of money and get a bit more market share. 

Suppliers (hardware manufacturers like Honhai and 3rd party developers), carriers and wall street don't live in vacuum. They usually work for the people who have the money. Unfortunately Elevation Partners (Bono included) does not have that kind of pocket. They could still survive if they can come up with a solid product (don't have to beat iphone, but got to be solid, I mean it works). But they did not do it successfully so far, at least they have not convince the sales reps at Sprint and VZ. 

What's next
Obviously a lot talk is around take over, and the value of new webOS. All these big guys RIMM, NOK, MSFT plus HP and Dell can afford to buy Palm. For RIMM, NOK and MSFT efforts are under way for new OS, so essentially the CEOs have to believe and persuade their people that (portion of) webOS is better than their own OS. Also, the final value of Palm may not be as high as many people liked.

From Palm's side, blaming others is not the solution. Because if they can not fix the product, and marketing problem, it's likely the company will be gone in not-too-distant future.

Bottom line
Again bet on the money you can afford to lose. I am going to sell some tomorrow. Better late than never :-)

Disclosure: no positions on PALM, RIMM, NOK, MSFT, DELL, HP, S, VZ