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Palm’s Hail Mary

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Palm stock was up 35% in the afternoon today and is up another 12% in after-hours trading.  Teetering on the brink of oblivion as the iPhone and, to a lesser extent, the Blackberry gobble up market share in the booming smartphone market, Palm showed off its long-awaited new gadget, the Pre.  The early returns are positive.

Kudos to them for a slick release.  But I’m bearish.  The iPhone is a great device in of itself, but the differentiator is the app store.  Developers are flocking to that platform, releasing a torrent of apps that dramatically enhances the iPhone’s utility.  “First Mover Advantage” has often been often overrated in the past, but in this case it’s legit.  The iPhone’s developer community generates network effects that will create an insurmountable lead over other platforms.  Worse for Palm, word is that the Pre’s app capabilities are limited.  Oops.  While I love my Blackberry and don’t see RIMM fading away any time soon, I think Apple is in the process of winning the U.S. smartphone market.  Palm’s Hail Mary looks to be an admirable effort, but I think it’s too little, too late.

Written by sandykory

January 9, 2009 at 6:05 am