Commentary
9/25/2009
09:21 AM
Eric Ogren
Eric Ogren
Commentary

Is Palm In Trouble If Verizon Passes On Pre?

Late yesterday, a rumor suggested that Verizon Wireless had decided not to sell the Palm Pre smartphone. Neither Palm nor Verizon has commented on the story officially. If it's true, though, what future awaits Palm?



Late yesterday, a rumor suggested that Verizon Wireless had decided not to sell the Palm Pre smartphone. Neither Palm nor Verizon has commented on the story officially. If it's true, though, what future awaits Palm?Back in May, Verizon Wireless CEO Lowell McAdam said that the company planned to sell "devices like the Pre" in six months. Everyone believed at the time that McAdam meant that Verizon Wireless would actually offer the Pre itself.

Fast forward to now, and TheStreet.com reports that sources familiar with Verizon's plans indicate that Verizon Wireless has decided to pass on the Palm Pre. The sources cite several reasons behind Verizon's decision.

Number one, no one but Palm knows how many Pres the company has sold. What we do know is that 823,000 is the absolute maximum number, as that's what Palm reported as its total sales figures for all its smartphones in its latest fiscal quarter. One thing is for certain, if the Palm Pre had passed the million-sold mark, we'd have heard about it by now. The original iPhone reached the million mark in about 75 days. The iPhone 3G and 3GS reached a million units sold the first weekends they were available. The Palm Pre has been available for nearly 120 days. Has the Pre been a blockbuster? Apparently not.

The other reason cited by TheStreet's sources is that Verizon wants its own V CAST Apps store to be prominently featured on all handsets. This conflicts with Palm's own Apps Catalog. I have to call BS on this one. Verizon Wireless has indicated that it is going to work with competing apps stores, such as Apps World available from Research In Motion, and Windows Marketplace from Microsoft, rather than exclude them. The idea that Verizon can't come to terms with Palm over the Apps Catalog and V CAST Apps store just doesn't make sense in that context.

Whatever the reasons, both Palm and Verizon have declined to comment. Palm only reiterated its handset roadmap for 2010, though it has never formally named Verizon as a future partner.

Whether or not this rumor is true, what do you think will happen to Palm if Verizon Wireless skips the Pre? Worse, what if it skips webOS devices from Palm altogether? Knowing Verizon, my guess is it wants an exclusive handset from Palm, not a device that will be more than six months on the market by the time it hits Verizon's shelves. When McAdam said "devices like the Pre", perhaps what he really meant was a webOS smartphone from Palm...but not the Pre itself.

If Verizon skips the Pre, though, it would be a serious blow to Palm, which needs all the distribution points possible if it has any hope of recovering. I wouldn't go so far as to say a snub from Verizon will doom Palm, but it will certainly be providing the lumber, nails and hammer to build Palm's coffin.

There's no much question that Verizon can survive without Palm, but I have a hard time believing that Palm can survive without Verizon.

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