Saturday, February 27, 2010

Palm in "Death Spiral"?

"Death spiral" is not a word any company executive ever hopes to see or hear in the same sentence as the firm name. But that's what Barron writer Eric Savitz now does. "I fear Palm has begun sliding into a death spiral," he says. "Palm is simply too small, too poor and too weak to compete in a market where some of the world's most powerful companies are vying for supremacy."

Though its competitors will not lament the potential loss of one contestant in the market, the webOS software Palm developed also is described by Savitz as "brilliant." Walt Mossberg at The Wall Street Journal in a review last summer called the Pre "potentially the strongest rival to the iPhone to date."

"There's just one problem: No one is buying the phones," he says. Palm now says revenue for its fiscal year, ending in May, will be well below its previous forecast of $1.6 billion to $1.8 billion. The problem, Palm said, is "slower than expected consumer adoption of the company's products." In other words, the Pixi and the Pre aren't selling.

Whether Palm somehow can pull off a turn-around is not clear, nor is it clear whether the company will wind up being sold to another firm. But webOS is yet another illustration of the fact that in the technology business, the "best" product does not always win.

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