Bono's VCs pilot Palm

In Tuesday's IT Blogwatch, Richi Jennings watches Palm get a big round of funding from VCs Elevation Partners, where a certain mononymous singer is a partner. Not to mention Merry Christmas from Chiron Beta Prime...

Agam Shah reports:

Bono (source: Elevation Partners)
Smart phone maker Palm received a cash infusion from a venture capital firm on Monday that could lift the company from its sagging fortunes.

Under terms of the agreement, Elevation Partners will provide $100 million and increase its investment in Palm. The investment comes at a time when Palm is struggling to remain a player in the mobile phone market, where it has been eclipsed by rivals Research In Motion and Apple.

Om Malik asks why:

It must be Christmas, as the guys at Elevation Partners are feeling generous enough to invest another $100 million into beleaguered smartphone maker Palm, which has been slip-sliding away for a very long time.


There are some things Palm can bank on: It has a big user base — between 7 and 8 million people are using Treos and are actually pretty thrilled with the aging devices; they can provide a good base on which to grow the company. In addition, there are a large number of application developers who continue to support the platform.

Eric Krangel reminds us:

Elevation, in case you've forgotten, is the VC firm run by, among others, two Valley rock stars: Roger McNamee and Bono.

Owen Thomas reads between the lines:

What did Steve Jobs do to his old buddy Bono? The Irish rock star, once the Apple CEO's adoring buddy, is funding the most credible threat to the iPhone yet.


Bono's firm now owns 39 percent of Palm. He's also lassoed several former Apple executives into the Palm corral. Fred Anderson, a former Apple CFO and board member, is an investor at Elevation. Jon Rubinstein, a hardware executive who served as Jobs's right-hand man at Apple, resigned in 2006 — one day before the company's 30-year anniversary — and joined Palm a year ago.

Just add water Tiernan Ray:

The agreement to give Elevation preferred shares will dilute common stock holders from 66% ownership of the company to 54% ... Elevation increases its stake to 37% of the company, while holders of options are diluted from 11% to 9%.

Good morning, John Murrell:

Palm is hanging its hopes on a new operating system called Nova, expected to be introduced at the Consumer Electronics Show in early January, hoping to roll out handsets that can grab a chunk of what [CEO Ed] Colligan calls the “fat middle of the market,” a hypothetical territory between the play-oriented iPhone and the work-oriented BlackBerrys.


Palm’s challenge is considerable — the iPhone is winning friends in the working world, the latest BlackBerrys have entertainment and social computing in mind, the parade of phones based on Google’s Android platform is only beginning, and smartphone sales overall are under pressure from the general economic woes. But for now, investors are encouraged and Palm has a lifeline.

Erick Schonfeld is downbeat:

Did Elevation just sink another $100 million into a clunker, or is the Nova going to be a sweeter ride than anyone expects? I’m thinking clunker.

But Kevin C. Tofel sees hope:

Nova has a long-term chance to save Palm while the $100m infusion acts as a short-term lifeboat. If Palm can use Nova through an innovative approach like making it a seamless environment used on both long-running smartphones and netbooks, I think they have a shot.


One thing’s for sure: we’ll know more in a few weeks once we see the “new-ness”. Until then, we can dream of $100 million investments, continue voting with our own dollars.

And finally...

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Richi Jennings is an independent analyst/adviser/consultant, specializing in blogging, email, and spam. A 23 year, cross-functional IT veteran, he is also an analyst at Ferris Research. You can follow him on Twitter, pretend to be Richi's friend on Facebook, or just use boring old email:

Previously in IT Blogwatch:

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