Rocky Road Ahead for Palm
In the midst of a global economic slump, market leader of
PDAs Palm, along with other high-tech companies, sees a rocky road
ahead.
Besides economic downturn, an inventory bulge and competition
prompted the Santa Clara, Calif.-based company to revise its
predictions for the fourth quarter of 2001. It currently expects
revenue for the fourth quarter to range between $140-million and
$160-million, compared to its previous fourth quarter revenue
outlook of $300-million to $315-million.
Furthermore, the company announced that the proposed merger with
Extended Systems, a provider of mobile information management
solutions, has been terminated, citing slowdown in economic and
market conditions as the cause.
Commenting on the turn of events, Palm’s CEO Carl Yankowski,
said, "Palm will continue to target the enterprise aggressively
via leveraged partnerships and alliances with a number of companies,
including Extended Systems."
The company was hurt by delays in the launch of its new models as
well as an inventory glut of old, cheaper devices.
But according to Palm’s CEO Carl Yankowski, "Our new m500
family of handheld computers is shipping in volume later than we had
hoped, precluding the opportunity for distributors, retailers and
reseller to reorder in our fourth quarter."
In addition, the company must now face increasing competition
from the likes of Handspring and Microsoft’s PocketPC. Even though
both competitors have introduced hybrid organizer-cellphones, Palm
appears to be sticking to its belief that simple is better and thus
is in no hurry to follow suit
However, some analysts say Palm’s latest offerings are only
revisions of its popular Palm V, and with its share of sales falling
to 63 percent from 83 in just over a year, the company should not
rest on its laurels too long.
For more information: http://www.prnewswire.com/micro/PALM
Mobileinfo Comments and Advisory: Like any thing
else, this had to happen. No vendor is immune to fundamental changes
that take place with the introduction of a new idea and technology. It
becomes more difficult if the economic climate changes as well. More
than delays in introducing new models, competition is a bigger factor
in Palm's current health. Its decision to cancel its planned
acquisition of Extended Systems will cost it dearly in terms of the
enterprise market. Leveraged partnerships is a good idea but you must
have enough in-house expertise to leverage the partners.
