SAN FRANCISCO — Last year, Palm thought it had all the pieces for a turnaround in the market it pioneered: A new CEO known for making the iPod a household name, a sleek new smartphone called the Pre and fresh, intuitive operating software.
Instead, the company is in danger of going the way of its 1990s Palm Pilot, making it the latest innovator to learn that great technology and an accomplished leader don’t guarantee success.
Several analysts say Palm Inc. might not remain an independent phone maker for more than a year or two. It just could be too late to stop the momentum enjoyed by Apple Inc.’s iPhone and Research In Motion Ltd.’s BlackBerrys — not to mention a growing crop of phones running Google Inc.’s Android software.
Palm spokesman Derick Mains said the company had no comment.
Consumers have gravitated toward smart phones for their versatile features, such as Internet access and applications that can be downloaded. One out of six U.S. adults had a smart phone last year, according to Forrester Research.
But Palm — a leader in the early days of handheld computing — was slow to adapt. It began fighting back in earnest in January 2009 at the International Consumer Electronics Show. It unveiled the stylish touch-screen Pre and webOS, software that allows Palm phones to do something the iPhone can’t — run multiple apps simultaneously.
Ed Colligan, who was then Palm’s CEO, said at the time that the new products somewhat marked a relaunching of Palm itself. But it hasn’t gone as smoothly as Palm hoped.
Palm released the Pre last June, for use on Sprint Nextel Corp.’s wireless network, and followed it in November with a cheaper model, the Pixi. Verizon Wireless started selling upgraded models of these phones in January, and AT&T Inc. plans to offer webOS phones later this year.
Despite widespread availability and positive reviews, consumers haven’t really embraced the products. Palm sold 810,000 phones in the quarter that ended Aug. 28. In the next quarter, sales fell to 573,000.
And Palm’s latest report, due March 18, is not expected to be bright. Palm recently cut its forecast for that period, citing sluggish sales.
Discouraged investors have sliced the company’s stock price by more than half since the Pre hit stores. In that same time, shares of Apple have risen nearly 50 percent to all-time highs, while RIM shares have fallen 11 percent.
One big problem for Palm is standing out in a crowded market dominated by Apple and RIM. Many analysts believe Palm’s latest products are good, but the company simply hasn’t been able to make potential customers realize this.
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