Palm’d a New Verb

On March19, 2010,  Palm Inc. announced its earnings.  Expectations were already low, since it had pre-announced poor earnings.  However, the actual results were poorer than poor and Jon Rubinstein, CEO, didn’t reassure investors on the conference call.  Matter of fact, the call had to be one of the lamest conference calls in the history of conference calls. This combination simply shifted the train wreck into overdrive and the stock was crushed to the tune of 30% on 5X its normal volume.   It  may not be added to Websters, but CEOs of mobile phone companies now know exactly what is means to be palm’d.

Palm’s report showed that it shipped more phones in the quarter ending on February 26 than in the previous quarter.  However, the phones weren’t in customers hands – they were sitting on its suppliers shelves. Rubinstein blamed the lack of “sell through” on poor training of Verizon sales reps. You don’t have to be a Harvard MBA to see through that BS.  Investors know that whenever a CEO blames a situation on anything other than its own poor execution – it is time to run for the hills.  That’s exactly why 125M shares traded hands.

I recently spent some time chatting with a sales rep at my local Verizon store.  We talked for over 45 minutes about all of the latest phones.  Over the course of that entire conversation, Palm’s name didn’t come up once.  Maybe it is the job of the rep to discuss all of their products, but a little of that is on the customer.  I had completely forgotten that Verizon sells Palm’s phones.  This points right back to Rubinstein and company.  Brand awareness shouldn’t be the carriers responsibility – it should be Rubinstein’s.

Many analyst have accepted the fact that there is a pre-iPhone mobile world (before 6/07) and a post-iPhone world.  In the pre-iPhone world, IMO, mobile phone manufacturers were not complete companies.  They depended on the carrier to do marketing, sales and customer service.  The carriers owned the customer relationship.  The mobile company’s customer was the carrier.

Thankfully, Apple wanted no part of this business model and changed the dynamics.  The carrier still plays a significant role, but the mobile phone manufacturer owns the customer relationship.   This has sped up   innovation tremendously.  Mobile phones aren’t thought of in the same manner anymore.  It has become more of a mobile computer than a phone.  While the pre-iPhone manufacturers are struggling with this new world order, post-iPhone entrants, like Google, are greatly benefiting and are creating some exciting products.

Palm won’t be the last mobile phone maker to be palm’d.  I am on record of saying that Research in Motion (RIM Rant I, RIM Rant II, Rim Rant III) is in line for a palm-ing.  This has not been received well by RIM fans. My call may turn out to be premature.  We are so early in the mobile computing world that RIM and others may have time to adjust.

That being said, I am fairly certain that every cell phone CEO witnessed PALM’s palm-ing. I am also certain that not one wants to be the next in line.  Do they have what it takes to succeed in the post-iPhone world? Who knows, but the clock is ticking.