Palm aims to stake out industry role with new offerings


Published: Friday, January 8, 2010 at 11:16 a.m.
Last Modified: Friday, January 8, 2010 at 11:16 a.m.

LAS VEGAS — Palm's news conference at last year's Consumer Electronics Show marked the beginning of its comeback story. This year, Palm seemed determined to show that its story still has some life to it.

The smart phone maker announced at CES on Thursday a long-awaited deal with Verizon, the largest carrier in the United States, to sell phones using Palm's new operating system. The company also unveiled two new phones, said it is opening up its application store to all programmers, and announced new capabilities for its webOS software that will help it keep pace with — or even surpass — rival operating systems.

"Last year, we said Palm was back, and we meant it," company CEO Jon Rubinstein said.

But the company has fallen far behind rivals like Apple and Google in sales and available applications. And the competition it faces is only going to get stronger, said Ken Dulaney, a mobile-phone industry analyst with technology research firm Gartner.

"Palm's got a tough, tough mountain to climb here," he said.

Rubinstein and the company left some important questions unanswered.

Most notably, it didn't say how many webOS devices the company has sold since it launched the Palm Pre in June. It also didn't say how much Verizon will charge for the new phones, which are updated versions of the Pre and Pixi, which the company launched in November. And while Palm officials said there are now more than 1,000 programs available in the company's application store, they didn't say how many applications Palm customers have actually downloaded and installed on their phones.

Palm representatives also declined to confirm reports that AT&T plans to offer two webOS phones this year.

Palm has struggled to maintain the buzz it generated at CES last year, when it won a "Best in Show" award and its new operating system and Pre phone drew accolades from the press. Since then, the company's efforts have largely been overshadowed by the continued success of Apple's iPhone and developments surrounding Google's Android operating system and the phones running it.

Still, the latest announcements could give Palm a boost. Previously, the only U.S. carrier that offered webOS phones was Sprint, which has far fewer subscribers than either Verizon or AT&T, the nation's No. 2 carrier. Having webOS phones on Verizon gives Palm a much larger potential market than it had previously.

The updates in the Palm Pre Plus and the Palm Pixi Plus address some of the shortcomings of their predecessors. The Pre Plus will have 16 gigabytes of internal memory, double that in the original Pre. Palm added a Wi-Fi antenna to the Pixi Plus, a glaring omission in the previous version, which will allow users to gain access to the Web and send e-mail via home networks.

The latest update to webOS will add video recording capabilities to Palm devices, a feature that's proved popular on the latest iPhone. And Palm is giving developers a new set of tools that will allow them to create more sophisticated applications, including games with three-dimensional graphics.

That capability comes as the iPhone and its iPod touch sibling have become important handheld game devices. The new capabilities in webOS could allow software developers to create games for Palm phones that are every bit as sophisticated as those for the iPhone. Electronic Arts, for example, demonstrated versions of its "Sims 3" and "Need for Speed" games for webOS that it began offering in Palm's application store Thursday.

Palm also announced a coming feature that's not yet planned for the iPhone: support for Adobe's Flash software. Much of the video available on the Web, and many interactive games and programs, are delivered through Flash. By offering Flash — through a software download that is expected to be available later this year — Palm will allow webOS users to access more Web content than they could on the iPhone.

The company also is opening its application store to all software developers. Previously, Palm had allowed only a few hand-picked programmers to offer applications in its store. The company said some of its software tools have been downloaded some 85,000 times. Such interest could indicate a rapid expansion in the number of programs available in its store.

Still, Palm has some big challenges ahead of it. Application developers tend to flock to platforms that have the greatest number of users. The total number of programs available on webOS are likely to remain limited until Palm is able to ramp up sales of its phones. But the lack of diversity in applications could well limit the appeal — and sales — of its phones.

And the move to Verizon comes as the carrier has made a big commitment to Android. Verizon heavily promoted Motorola's Droid phone last year and plans to roll out a slew of new Android models this year. Analysts have already questioned the degree to which Verizon will support the webOS phones.

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