Palm undiversifies platform strategy

While multiple mobile platforms allow a firm to serve different target groups and also to hedge their bets, they are also expensive to support and defocus a company, particularly one that’s struggling.

Eleven months ago, in the face of a $400m quarterly loss, Motorola announced it was cutting from six (or seven) platforms down to three: Android, Windows Mobile, and its own proprietary platform.

Now it’s Palm’s turn to slash its platforms, from three down to one. In the earnings call that confirmed its widening loss ($161m on sales of $68m), on Thursday CEO Jon Rubinstein made clear that both Windows Mobile and (as expected) Palm OS are history:

Due to importance of webOS to our overall strategy, we've made the decision to dedicate all future develoment resources to the evolution of webOS. Which means that going forward, our roadmap will include only Palm webOS-based devices

(Moconews has the quote slightly differently: “So while there are still Centros and Treo Pros, our future engineering efforts are based on webOS.”)

That seems to suggest a US-only, consumer-only focus — and it’s a lot of eggs in the webOS basket. So far, Palm won’t say how many of the 810,000 phones sold last quarter were the Pre, but speculation puts it at the 400,000-500,000 range — a good weekend’s sales for the iPhone. The predictions of a Palm Pre blowout by investor Roger McNamee appear to have been overly optimistic.

Is Palm’s problem the product? (Not if you believe the reviews). The immature ecosystem? Its limited marketing clout to launch a new platform? The fact that it’s only on a weak carrier?

Only the latter is easily fixed, but rumor has it that the webOS phone for Verizon is not until 2010. Lord knows, Verizon desperately needs better phones, as this Wired story makes clear:

"They lack the star products that their competitors have," says Avi Greengart, research director, consumer devices for Current Analysis. "They recognize they don't have compelling devices right now but feel they can make up for it with network quality."
…
"Verizon doesn't have too many options," says Michael Mace, a former executive with Palm and Apple and currently a principal at strategy and marketing consulting firm called Rubicon Consulting.

"They can't get the iPhone right now and they can't take Nokia devices and start promoting them. All they can do all they can do is push the BlackBerry as hard as they can and hope for a new Motorola phone."

The Wired story (also available on CNN) notes that Verizon is promoting a HTC Windows Mobile phone at $200, less than the $350 that Sprint and T-Mobile charge.

I realize Palm is resource constrained, but clearly beating Motorola to Verizon would make a huge difference to the bottom line. Is it that Palm can’t ship another phone in time? Or is it that the 2009 exclusive that it gave to Sprint was for the entire webOS and not just the Palm Pre?

Either way, this is not a lot of runway to turn things around.