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The end of the Palm saga

The company that managed to develop the first successful PDA in 1996, the Palm Pilot, is losing out in the battle for the smartphone market.

Palm didn’t have the resources to quickly match the iPhone, RIM, and Android. Palm’s own smartphone, the Pre, was late to market when it launched in June last year. The industry chatter before the launch viewed the Pre as Palm’s last chance to survive and a do or die project.

Now the results are in. Sales of the Pre have been a disappointment. During Q3 2009 they only sold 408,000 units to customers, a drop of 29% from the second quarter. Their global market share in Q309 was 1% and Palm only has a significant presence on the North American market with a 5% market share. The Palm app store only has 525 applications.

The smartphone market already has too many incompatible software platforms: iPhone, Blackberry, Symbian, Windows Mobile, BREW, Bada and LiMo. The weakest players will not be able to build an ecosystem of developers and I think the network effects will be ruthless once the market has decided that a platform is a loser. The WebOS from Palm is just one too many.

Palm might have a slim chance if they abandon WebOS in favor of Android, but that means even more lost time. Perhaps a strong industrial buyer will acquire Palm but most of the players have already placed their bets on Android or one of the other platforms.

Palm Computing defined the PDA market in the 1990s and in 1998 they held a 59% market share. In 2005, they brought a well designed PDA-phone (Treo 650) to the market. However, at that time the mobile data networks were too expensive and lacked seamless roaming. There were no app stores. The high end smartphones of 2005 were an expensive niche product with little appeal to the mainstream market. It is a sad story that this company now seems to be heading for the grave. But if there are winners on the market there have to be losers.

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