As he stood up to boast of his latest creation, Palm founder Jeff Hawkins had no doubts about its bright future. “Foleo represents a whole new product direction both for Palm and for mobile computing,” he enthused ahead of the device’s launch in May. “In my opinion, the Foleo is going to be most successful and the most significant product that Palm has done.”
A month on, Ed Colligan, president and chief executive of Palm, was still keen to back up Hawkins’s grand vision. Foleo represented “the dawning of another major design era of mobile computing”, Colligan told analysts, even though he admitted that initial sales were likely to be slow. Worries about Foleo’s future then set in. By the start of this month, instead of being shipped to stores, the Foleo project had been cancelled.
To observers it was yet another example of Palm struggling, as it has for years, to regain the lead it once held as the world’s premier maker of handheld (or “palmtop”) computers.
I must quote myself:
Palm could have never developed the iPhone. Because it didn’t fit into what they were taught so long ago. Zoomer owners wound up creating a sort of design religion that’s hardened into a crust of fundamentalism at Palm. It explains why Palm has been so hard of hearing towards its users: we are like infidels and they are like Muslim clerics! Only they know the Truth.
I’d like to hold out hope that the Elevation Partners people will wrench Palm into the present and even the future. But so much time has been wasted! Plus, Palm’s leadership, just like Muslim clerics, tends to believe what it wants to be believe:
To date, we have not seen significant seasonal variations in customer demand for Treo smartphones. This lack of seasonality contrasts with our experience of selling handheld computers due to three factors. First, the smartphone category has been growing rapidly which may mask any potential seasonality. Second, smartphone sales volumes are influenced by carrier adoption and the release and timing of specific carrier versions which could occur at any time during the fiscal year. Third, our smartphones are sold at higher prices than handheld computers and holiday seasonality typically affects demand for lower priced products. As we introduce lower priced smartphones, we may experience similar seasonality as with our handheld computers.
Our handheld computer lines have historically been affected by seasonality, with associated revenues generally sequentially higher in the second quarter of our fiscal year, as distributors and retailers purchase product in anticipation of the December holiday selling season. We also have historically experienced smaller positive effects on revenue in the first and fourth quarters of our fiscal year, as distributors and retailers purchase product in anticipation of the back-to-school and the Father’s Day and graduation selling seasons, respectively. The timing of our new product launches also contributes to fluctuations in our revenue. While we historically introduced new handheld computer products in the fall and in the spring, which historically contributed to higher revenue in the second and fourth fiscal quarters, respectively, this pattern has been less pronounced with the product mix shifting to smartphones.
Unasked is: Are people not giving Treos as gifts because they suck? People won’t give other people something as a gift if they don’t like it themselves.
“The market grew 45% but Palm, with Treo, quarter after quarter it has not increased share,” added Cozza. “Palm is stuck at 3% and its growth is below the market average, whereas competitors like Rim [which makes the BlackBerry] and Nokia are increasing share.”
How will Ed Colligan explain the millions of iPhones bought as gifts later this year? Fluke? Apple Reality Distortion Field? Alien abductions?
“We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in.’”
– Ed Colligan
“In my opinion, the Foleo is going to be most successful and the most significant product that Palm has done.”
– Ed Colligan