Commentary
11/25/2008
08:55 AM

To Remain Viable, Palm Plans to Cut Positions

Remember Palm, the company that helped to define the smartphone market? While many may have forgotten about the company in the midst of all the hoopla about Apples iPhone and Googles Android, Palm still has a sizable customer base. The company plans significant moves to try and retain that base.



Remember Palm, the company that helped to define the smartphone market? While many may have forgotten about the company in the midst of all the hoopla about Apples iPhone and Googles Android, Palm still has a sizable customer base. The company plans significant moves to try and retain that base.Palm is gearing up for the fallout from the recent slowdown by cutting its workforce. The cuts come at a time when the company faces a couple of significant challenges. As sales have increased, competition in the smartphone market has intensified. In addition to traditional foes, such as Nokia, Research in Motion, and Microsoft, Palm faces a new set of adversaries, such as Apple and Google. Consequently, Palm has been losing market share and mindshare. Sales of its Treo and Centro smartphones have been declining. To help prop up its bottom line, the company decided to pare its workforce.

Also, the vendor has been moving away from its totally proprietary hardware platform and taking an open source software focus, a technique undertaken by many struggling equipment suppliers. The supplier plans to launch a new product line with Linux as its underlying operating system. Unfortunately, the vendor does not seem ready to delivery its new product during this holiday season, thereby missing out on the markets largest sales period. In addition, it is unclear how Palm will differentiate itself among a growing gaggle of mobile operating system suppliers, many of whom also rely on Linux. To entice new customers, the firm will need to build up a developer community, an area where the firm has had a series of starts and stops during its tenure.

Palm helped to define and develop the smartphone market segment. As a result, it was a market leader, and many small and medium businesses still rely on its products. Recently, the company has struggled to develop a clear corporate strategy and been struggling to maintain its momentum and market share. The company has been late to deliver its new platform and now plans to cut its workforce, so Palm clearly is a firm in transition. It is questionable whether or not the company will be able to navigate its way through the necessary changes. Consequently, small and medium businesses would be wise to think twice before investing in its technology.

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