Palm's buzzworthy Treo Pro is merely a flotation device for the troubled company as it readies its next smartphone, coming in 2009, an analyst says.
Since 2006, Palm has declined in U.S. market share each year. And it won't be the
Treo Pro that reverses this trend; rather, Palm's next new offering -- about which little is known -- is the company's last hope, said Tero Kuittinen, a telecom analyst at Global Crown Capital.
"At the moment, Palm is just trying to keep the company going before this hopefully revolutionary new device arrives," he said.
Just two years ago, Palm was the leader in the U.S. smartphone market, but since then the company has fallen behind its major competitors HTC and Research In Motion (RIM). And Apple is hot on Palm's heels.
Kuittinen said the Treo Pro's major downfall is its pricing in the United States, where Palm is only offering the smartphone for $549 -- unlocked and without carrier subsidy. He explained that the handset's lack of subsidy will turn off many consumers, especially when taking into account Apple's recently slashed prices of the tremendously popular iPhone 3G.
"The problem here is the pricing structure has changed: The iPhone went down to $200; the Samsung Instinct went down to $230," Kuittinen said.
"This is no longer the same phone market we had a year ago."
However,
Palm's product-line manager Phil McClendon insisted that the Treo Pro will be a tough contender against other popular devices. He explained that the iPhone is designed for casual consumers, while the Treo Pro focuses on business users. As for competing with Research In Motion,
McClendon said the Treo Pro has software and networking advantages that make the handset more convenient than RIM's BlackBerry.
Despite
Kuittinen's criticism regarding lack of U.S.-carrier subsidy, McClendon defended the decision, saying users would appreciate the freedom to use the Treo Pro wherever they wanted without having to enter new contracts.
Nonetheless, Nielsen Mobile's research illustrates that Palm is constantly heading downward, and Kuittinen said Palm needs to wow the phone market in order to get its groove back.
Just what does Palm have in store for us next? Little is known about Palm's upcoming phone other than that it will feature an entirely new platform and new hardware.
McClendon declined to disclose details, but it's interesting to note that just this year Palm hired Jon Rubinstein, a former Apple engineer instrumental to the creation of the iPod, as its head of product development. Will
Rubinstein lead Palm to introducing the next revolutionary device?
There's no knowing until we see the phone, but Kuittinen encouraged Palm to put a larger screen on its next device. He said the Treo Pro's 320-by-320 pixel screen is still too small compared to the iPhone's 480-by-320 pixel screen. And a major reason the iPhone is so popular is its large screen makes web browsing a convenient experience, he explained.
Speaking on the subject of Palm's next platform, Peter Hoddie, president of mobile software developer Kinoma, said that in order to revitalize itself, Palm also needs to offer a suite of new, innovative applications.
"Operating systems don't matter to most customers," Hoddie said. "What matters to them is what they can do. ... Why do [people] love iPhone?
They love the apps. Why don't people love Windows Mobile? It's in fact an amazing operating system ... but the apps on top of it? Not so inspired."
Looking ahead, Kuittinen said consumers should feel excited about Palm's next offering, considering its new leader's repertoire for revolutionizing hardware.
"It's really exciting; it's one of the biggest mysteries right now," Kuittinen said. "What are they going to do?"
(Photo courtesy Palm; graph by Wired.com; graph data courtesy Nielsen Mobile)
