Ultimate Palm Pre-Game Analysis: Let’s Get it On!

One of my favorite things about the Super Bowl is the pre-game analysis. Sure, it goes on for days, but it’s still fun listening to the opinions of analysts as they break down the strengths and weaknesses of each competitor. For Palm the upcoming Pre smart phone is the Super Bowl, World Series, World Cup, and NBA Finals rolled into one. Everything is riding on this highly-anticipated launch, which is why I thought it was appropriate to invite three of the smartest analysts in the wireless biz to sound off on everything from the Pre vs. the iPhone, to picking the right launch date, and Palm’s chances of winning over developers for its webOS.

Our cast of experts includes (from left to right in our tongue-in-cheek photo composite):

Andy Castonguay: director, Yankee Group’s Anywhere Network research group
Ramon T. Llamas: senior research analyst, IDC Mobile Technology and Trends
Ross Rubin: director of industry analysis, NPD Group

Let’s kick things off, shall we?

What are your impressions of the Pre thus far? Is it on par with the iPhone in terms of user experience?

Castonguay: In the brief time I had with the Pre during CES, I came away extremely impressed with the user interface’s speed, flexibility, and crisp appearance. No question, Palm has closed the UI gap in the mobile world. Apple certainly has a more robust ecosystem built up around the iPhone, but it will no longer be the primary UI king.

Llamas: My sense of the Pre is that it’s wickedly cool. It’s smart, it’s slick. To borrow a quote from the automobile industry, this is not your father’s Palm device. You have the multitouch screen, the card user interface, the Synergy technology, and the webOS–everything ties seamlessly together. The question is how simple and intuitive is it going to be? Having seen and played with the Pre at the tradeshows, it seems that Palm has done a very good job of that. We’re just waiting to see whether or not upon launch if there are any other kinks that need to be ironed out.

Rubin: Palm is facing strong competition but has landed a coveted position among the four major U.S. carriers as a flagship touchscreen smart phone. Palm has captured a lot of the things consumers like about the iPhone — a simple, modern, fluid touch user interface, a strong browser, and a sleek form factor, and added features the iPhone lacks such as a keyboard or multitasking.

If you were an app developer would you prioritize the Pre or webOS or put it on the back burner?

Castonguay: The advantage to the new Palm OS is the speed with which it facilitates development of new apps. Globally speaking, the device is volumes behind Symbian, Blackberry, Windows Mobile and now Apple and Android make more sense, but the mobile world is large enough to accommodate this kind of innovation as Apple has clearly shown.

Llamas: One of my colleagues was at a conference recently and virtually every developer in the audience was an Apple OS X developer, and the general reaction is “I need to program for another operating system like a need a hole in the head.” That’s very telling right there. But we’re still very much in the early stages for this entire application storefront race if you will.

Rubin: Palm is taking some risks that may not pay off for a while, such as its Synergy architecture. While Facebook continues to grow, it may not yet be mainstream enough to feed consumers’ address books. And some of the proactive actions the Pre can take on your behalf that have been described have the potential to backfire. But Palm is giving developers a modern operating system, a stable hardware platform, and convenient development.

One of the issues Apple has raised with multitasking is that it significantly impacts battery life. Do you see multitasking as a key selling point for the Pre?

Castonguay: In my brief encounter with the Pre, I really liked its approach to multitasking and app control. It was quick, intuitive and will push the envelope for designers to be more creative on how UIs could and should evolve.

Llamas: A number of factors come into play when it comes to multitasking. Number one is usage: how often is the user going to use those cards and move from one to the next. Number two is which applications are going to be used; there are certainly applications out there that are a heck of a lot more battery and memory intensive than others. The question is how you make these applications efficient in terms of power. I’m really hoping that Palm will knock it out of the park where they can say you can be this intense with your device and still not have to charge it for 3 or 4 days. That would be a significant milestone.

Rubin: It isn’t about multitasking per se but about the flexibility and fluidity that it enables. Apple actually does a good job of hiding the iPhone’s application switching transitions, but the card interface (on the Pre) demonstrates the benefits of multitasking better than Android or Windows Mobile. There are a lot of variables involved in determining battery life, but Palm could encounter the “good” problem of multitasking leading to greater than anticipated usage even if background applications are managed intelligently. The benchmark will have to be other multitasking operating systems.

Is being a Sprint exclusive (at least for now) a negative or positive for Palm?

Castonguay: While Sprint has suffered of late, the Pre will dramatically improve its top-end portfolio. As a result, Sprint will put substantial marketing muscle behind the launch which will boost Palm’s market positioning and pave the way for expansion into other tier-one operators.

Llamas: I think it’s a positive thing. The relationship between the two companies has been so strong for not just this device but also for previous releases. It’s helped Sprint drive ARPU and Palm get some compelling devices out there.

Rubin: The Pre would have had to fight for more attention at AT&T against the iPhone or at T-Mobile against the G1. It is a more novel device than the Storm, and so having it picked up by Verizon would have exposed it to a larger customer base, but Sprint has long been a debut partner of Palm and there is strong brand recognition for it within the operator that may have led Palm to bundle a PalmOS emulator. Sprint will be able to promote the Pre as a hero smart phone the way the other three major US carriers have for the iPhone, G1, and Storm.

Rumors are swirling than Palm might announce the Palm Pre on June 7th, right before Apple’s WWDC. Do you think that would be a bad idea? When would be a good launch window at this point?

Castonguay: The best launch window for the Pre is as soon as humanly possible.

Llamas: First of all, stick to your promise. Looking at my calendar Palm has two months left to do that. As far as May goes, putting those rumors aside about Sprint employees not taking vacations, I hadn’t heard any other major announcements. I think (June 7) would be incredibly brave. Let’s face it; everyone in the industry is gearing up for what the next-generation iPhone is going to be. And if history is any indication, any time there has been a countdown to an announcement, all eyes have been on Apple. Will Palm be doing itself a disservice? It depends on how bold they want to be.

Rubin: Palm has little to gain by planning a launch around the iPhone. It wants to establish itself as the innovation leader in the smart phone space and planning a launch around WWDC just drives more attention to the iPhone OS and reinforces Apple’s position. Besides, if Apple announces a new iPhone at WWDC, it will have had the benefit of seeing the Pre in action and will be in a position to upstage it in some respects. It would be better to launch significantly before WWDC to establish the game of leapfrog. And, of course, the earlier Palm ships, the earlier it starts to realize critical revenue from the Pre.

At a time that netbook vendors are looking to differentiate their wares, do you feel like the webOS could translate well to the netbook/MID realm?

Castonguay: The new OS certainly has that potential, though I suspect it is low on the Palm priority list.

Llamas: Anything can go beyond where it is right now. Linux has been great for that. It’s on computers, it’s on phones, and it’s on a couple other things as well. Could webOS go to other devices? Right now all that I’m hearing is that Palm is looking to bring it on more and more phones. They have a strict focus on making that a success.

Rubin: As for webOS in MIDs or netbooks, there’s likely more promise for that in something between a 4″ and 7″ screen for a few reasons (form factor optimization, notebook functionality expectations). It’s more likely that we’ll see devices in this class running Android (like the MovIt mini) as it has been developed to support a broader range of hardware. For Palm, launching such a device seems too risky and distracting until it is firmly back on its feet.

Given that many PC makers want to get into the smart phone business, do you feel that Palm is a ripe acquisition target?

Castonguay: Palm has a strong sense of pride in its heritage and enthusiasm for its short term prospects due to the Pre. This combination may make acquisition a tricky endeavor for potential suitors. That said, buying Palm would instantly put a company like Dell into a unique category and help it gain dynamic market positioning over the myriad of Windows Mobile devices being pumped out by others. With its strong enterprise channel, growing consumer play and its leasing capacity, Dell would be a great potential suitor for Palm or even as a key distribution/retail partner.

Llamas: Right now I don’t see Palm being an acquisition target. They’re working on getting something really big out there. I don’t think that’s on Palm’s mind right now.

Rubin: PC makers already had a chance to get Palm cheap before the Elevation Partners investment and apparently passed. Windows Mobile may not be winning in market share today but the greater integration with Windows 7 ($74.99) is where a lot of the branding and cross-promotion leverage comes into play for PC makers, especially in the enterprise market. The amount that Palm has spent developing webOS doesn’t jibe with the cost structures of the PC business (except for Apple)

What do you think Palm’s outlook is for this year and beyond?

Castonguay: I’m optimistic that the Pre will guide Palm out of the doldrums of the past 7 quarters. There is a tremendous amount of heavy lifting to be done with marketing support for the device, but operators are well aware of Palm’s financial constraints and still appear willing to bring the device into the fold. That speaks well of Palm’s chances for a come back.

Llamas: The Palm OS as we’ve known it is going to come to a screeching halt. And Everyone at Palm that I talk to is saying that we’re going to bring this webOS to more and more devices. We also have to see how fast and how aggressive they’re going to be in bringing the Pre out not only to other carriers in the U.S. but other countries. It’s a distribution game.

Rubin: Pre and the webOS are entering the market during a period of great transition in the U.S. cellular market. Smart phones continue to grab share even with their being tied to expensive data plans during a recession. The Pre also takes Internet data integration to a new level with its Synergy architecture and standard Web development language support. Palm is building upon the intuitive gesture-driven user interface that the iPhone has pioneered, but will support multiple carriers and models in the way that has allowed RIM to claim market share leadership.