Update: Time is right for Palm sale, analysts say
Company is profitable, but is being outgunned by larger competitors
Computerworld - Rumors circulated late last week on Wall Street that Palm Inc. was putting itself up for sale, which one industry analyst said would be a good idea.
"I think it would be a good thing if they were purchased," said Gartner Inc. analyst Ken Dulaney. "They're doing well now, but they need more capital to do the things they need to do."
The rumors late last week drove up the price of Palm stock. Palm spokeswoman Marlene Somsak said late Monday that the company does not comment on rumors and speculation. "There's new ones every day," she said.
Dulaney said he had no direct knowledge that, as several news stories indicated, Palm was preparing itself for sale. He did say, however, that Palm investors told another Gartner analyst of the preparations.
"The rumor that [Palm] is in play came from investors," Dulaney said. Whether the stories are true, Dulaney said that Palm, which is currently profitable, can't keep up its profitability over the long haul, particularly with its popular Treo line of smart phones starting to show its age.
"Today, the big guys can do new [phone] models every six months," Dulaney said. "Palm just can't do that. The Treo has been out there far too long. Its electronics have been upgraded, but it's just too thick."
Dulaney was referring to the trend toward ever-thinner and smaller smart phones, such as the Motorola Q, Samsung's BlackJack and Research In Motion's Pearl. Even RIM's long-popular BlackBerry line aimed at business users received an overhaul recently with release of the thinner, smaller BlackBerry 8800.
Another analyst, Miro Kazakoff, said the market for smart phones is changing rapidly and the Treo has not been keeping up with its competitors. Kazakoff is director of the wireless practice for Compete Inc., a consulting company that monitors Web activity at specific sites to determine user behavior.
In particular, Kazakoff said that phone vendors have started offering lower-cost smart phones aimed at consumers. And while Palm responded to this trend with its low-cost Treo 680, that device isn't doing as well as higher-visibility devices like the Samsung BlackJack and the Motorola Q.
"What we've seen -- and it's not a great sign for Palm -- is that 50 percent of those looking at the BlackBerry Pearl are also looking at the BlackJack, but less than 15 percent of that same group are considering the Treo 680," Kazakoff said. "A lot of these shoppers haven't considered smart phones before and the Treo isn't as much on their radar as the others."
One issue might be that the Treo is bigger and thicker than its newer competitors, Kazakoff said. But another problem relates to the size of Palm as a company.
- Mission Critical: Managing Mobile Applications & Content Smartphones, tablets and other mobile devices have become embedded in enterprise processes, thanks to the consumerization of IT and a new generation of...
- Securing Mobility, From Device to Network At one time, the process of managing and securing mobile devices and applications was fairly straightforward. Most organizations worried about one application (email)...
- Planning for Mobile Success Many organizations are seeing clear and quantifiable benefits from the deployment of mobile technologies that provide access to data and applications any time,...
- The Challenges and Opportunities of Mobile Application Development Nearly all business users now demand mobile devices--their own or company-owned--along with anywhere access to corporate applications and data. What turns mobile devices...
- On Demand: Mastering the Art of Mobile Content Management Mobile device usage in the enterprise has skyrocketed, and it continues to escalate. IT must answer to users who demand access to their...
- Technology for Everyone A Kansas school district modernizes teaching and learning and paves the way to a one-to-one program with a comprehensive upgrade of its wireless... All Mobile/Wireless White Papers | Webcasts