News broke on Thursday that Palm’s WebOS phones are not selling terribly well. The Pre Plus and Pixi Plus on Verizon haven’t been enough to save Palm from issuing a warning that their upcoming earnings may not be sunshine and rainbows. Worse, there are indications that orders of their phones are slowing, indicating demand simply isn’t there. The big question now is, did Palm know this when they claimed production was shut down for Chinese New Year? If they did, and Chinese New Year was just a convenient excuse, there are quite a few people angry at Palm for that bit of obfuscation. And it may end up being more than just a white lie…
CNBC has some interesting commentary on the controversy; their take is that Palm has destroyed the trust that consumers and financial analysts put in them to TELL THE TRUTH. Palm is a major underdog, and people have been justifying supporting and sticking with them. But rather than reward their supporters, Palm may have lied through their teeth, and that’s not any easy thing to forgive.
From the CNBC article:
If the company knew three weeks ago that Verizon and Sprint were stopping orders, why not just announce it then? Why dribble the news out, and attribute a manufacturing stoppage to the Chinese New Year, which would ultimately not pass the smell test since the work holiday typically only lasts a week and Palm’s manufacturing has been suspended for the entire month?I put these questions to Palm spokesperson Lynn Fox earlier today. She says, “We ramped up production, just before the Chinese New Year and in preparation for Verizon and intend to start the line back up at the end of February, and that would have been the same even if we didn’t pre-announce.”
That might be the case, but the analysts I’m talking to are furious.
Management has a serious credibility issue, I’m told, and this only makes it substantially worse. Another told me that Palm’s attempts to throw investors off the scent of an order slowdown by its major customers by connecting a manufacturing stoppage to the Chinese New Year isn’t nearly as forthcoming as the company ought to be. (He had more colorful language to share, but that’s what he meant.)
Even worse, the Wall Street Journal uncovered an internal memo from CEO Jon Rubenstein, indicating Palm had a pretty good grasp on the slower Verizon sales. Overall, the week’s news have been very unpleasant for Palm. This is a big problem for a company with tiny market share. Their best features (like Synergy) are being worked into Android, their phones aren’t selling, and worst of all, they aren’t giving a clear read on how bad the situation is. Then again, this is the same Palm who paid for a to Palm OS, and then abandoned it in favor of WebOS, with only a 3rd party “Classics” app to bridge the gap.
Palm needs to convince three groups that they still matter: consumers, developers, and analysts. Consumers will come to the platform when there’s a reason to whoo them from Android. Developers will come when there’s an audience, so Palm needs to connect those two together somehow. They also need to hang onto the developers already working on WebOS; it’s a bad sign when Classics, the flagship app, is actively being requested for other platforms. And finally, Palm needs to prove they are being HONEST with analysts and investors. Like a kid who hid their bad math grade until the report card was mailed home, Palm pretended things weren’t as bad as they are. They need to face the truth, and fast…or there won’t be anyone left cheerleading for them.
(News reports via Palminfocenter)