Palm: The Pre Isn't Selling As Well As We Hoped
As it readies Wall Street for a disappointing quarter, Palm has said the company's cell phones aren't selling as fast as they hoped.
Palm has said that its WebOS devices aren't selling as well as the company had hoped and that revenues are well below what they expected them to be. CEO Jon Rubinstein said in a letter to employees that Palm expects to report Q3 revenues of between $300 and $320 million, a significantly lower number than the guidance figures offered to Wall Street ($1.6 to $1.8 billion).
Palm said in a press release yesterday that revenues are being impacted by "slower than expected consumer adoption" of the company’s products. This has resulted in lower than expected order volumes from carriers and the deferral of orders to future periods.
Shortly after the press release went out, Rubinstein sent out a letter to employees explaining why the company had made this information public before it announced it's Q3 results in March. Rubinstein also played a little 'pass the buck' and shifted some of the poor sales blame to Verizon.
"I realize this news is difficult to swallow. We made this announcement today to prevent a surprise for Wall Street when we announce quarterly earnings in March. … Dave Whalen and I just returned from a very successful meeting with Verizon Wireless, where they acknowledged that their execution of our launch was below expectations and recommitted to working with us to improve sales."
Rubinstein went on to say that despite sales being slow than expected, he was still confident that the company "has was it takes to get the job done."
Check out his full letter below.
Team,
This morning we announced preliminary results for our 2010 third quarter. Since the quarter has not yet closed, it is too soon to offer exact numbers, but we stated that we expect to report revenues for Q3 between $300 and $320 million. We also announced that we expect our revenue for this fiscal year to fall below the guidance we gave to Wall Street, which ranged from $1.6 to $1.8 billion. As we mentioned in our press release, our softer than expected performance is due to slower than expected customer adoption of our products, which in turn has prompted our U.S. carrier partners to put additional orders on hold for the time being. On a positive note, we expect to exit the quarter with over $500 million in cash on our balance sheet. We're scheduled to announce our full financial results in March.
I realize this news is difficult to swallow. We made this announcement today to prevent a surprise for Wall Street when we announce quarterly earnings in March. In the meantime, the entire executive team has been working extremely hard to improve product performance, and have implemented a number of initiatives to increase awareness and drive sales.
Dave Whalen and I just returned from a very successful meeting with Verizon Wireless, where they acknowledged that their execution of our launch was below expectations and recommitted to working with us to improve sales. To accelerate sales, we initiated Project JumpStart nearly three weeks ago. Since then, nearly two hundred Palm Brand Ambassadors, supplemented by Palm employees from Sunnyvale, have been training Verizon sales reps across the U.S. on our products. Early results from the stores have already shown improvement on product knowledge and sales week over week. You may have also seen a growing number of Palm ads on billboards, bus shelters, buses, and subway stations-all getting the word out about Palm.
All of these efforts are examples of how we are working to accelerate adoption and grow distribution of webOS. In the next few weeks, your management will work with you to make sure your priorities are laser-focused, primarily on helping to increase sales, improve product quality and differentiate the Palm product experience.
Our goals are taking longer than expected to achieve, but I am still confident that our talented team has what it takes to get the job done.
We'll schedule an all-hands meeting after our earnings announcement in March, and I'll be happy to answer your questions.
Go team!!!
jon
- Matias Designs Keyboard Integrates Your Phone
- Quake 3 Ported to Android; Runs Impressively
- Teenager Gets 15 Years for Facebook Sex Scam
- GT2 Brings Arcade Seating to PC, Consoles
- LG to Ship Windows Phone 7 Device in September
- Google Trashing, Promoting Gmail Labs Features
- O'Brien Beats Leno on Twitter in Mere Hours
- Hollywood Says Court Ruling Bad, ISPs Are Evil
- Lionhead May Sell Fable III Condoms
- Blockbuster Closing 500 More Locations, Optimistic
- Samsung's First 3D HDTV: The Good and Bad
- $14K Media Server Coughs Up HD Goodness
- TigerText iPhone App Nukes Texts, Allows Cheating
- Think Movies are Expensive to Make? Games Are!
- Android is for Boys? 73 Percent of Users Are Male
- Apple's iPad: The Next Gaming Platform?
- Street Officially Named After Lara Croft
- Google Launches Tool to Find Chile Quake Victims
- Nintendo Wii Modded into A Laptop
Team: Our cell phones aren't selling due to slow adoption, so let's blame the carrier.
Well, honestly that's not due to the Pre itself but the lack of innovation between when Palm basically owned the PDA market and just now. I was with Palm all the way, but the last 3 years (before the Pre) were rough for most "followers", and I eventually jumped ship. Nothing personal, but I am happy with the competition now.
This wouldn't have happened if they had used Windows Me instead of WebOS!
Well, if they used iPhone number as estimate for Pre sales of course they are going to be disappointed. Stop trying to be an iPhone killer and just make a phone that works for your particular market. Nothing is going to kill iPhone.
Those poor saps, don't they know Android is to blame... they will never realize their dreams...
I was so dissapointed by the Treo.
So should I buy a Pre ? No reason at all.
Customers become dissapointed by older Palm product and see better outside.
Blackberry and iPhone are better hardware and software.
I think they don't realize how slow is their developement and their hardware doesn't change much over YEARS.
They just follow the wave (previously good in cell industry) but really bad now because product have new feature FAST (Palm miss the wave).
Who want an outdated Pre ?
Hints:
-put an open OS in there (Android, for instance) that anyone can develop for;
-hook it up to the app market;
-sell it unlocked and rooted so anyone can play with it; no artificial barriers should be allowed.
-lean back and enjoy the sales.
$300 and &320 million are actual quarter numbers. The $1.6 to $1.8 billion were the expected yearly totals. Please present the numbers correctly.
Oh, and last hint:
-stay on top of the hardware wave at least once a year and follow-through with good software support (drivers).
That's about it.
WebOS looks like a nice mobile OS, but it has been extremely slow to get the products to market that made Palm OS successful. I work in the medical field; there was a time that EVERYONE had a Palm because of the selection of medical programs that ran great on their device. Windows ported many of these to their OS, but they never ran as smooth as on the Palm.
The iPhone has many of these programs now, some are FINALLY being ported to Android, but WebOS still supports very few, if any. The only option is to run it in their PalmOS emulator mode, which isn't very appealing at all.
Let's hope that Windows Phone 7 supports these programs...
Oh, I also dont like their pull down keyboard. I prefer the slide out seen on HTCs, the Droid, etc; the small Palm keys are a pain. I have a Palm Treo Pro running WM6.5 as a hold-over for Windows Phone 7 with a slide out keyboard.
Maybe they shouldn't have some Creepy woman trying to sell me their phone on TV. Find a better marketing strategy that doesn't look like a psycho talking about their phone...
If they had offered the phone through Verizon upon release instead of 6-8 months after release,they would have sold a lot more.
I know several people that were salivating for the PRE but wouldn't come near Sprint with a 20ft pole. During that lag time, I purchased a new Blackberry because my Treo finally died and I needed a phone immediately.
My friends that waited for the PRE to hit Verizon had lots of time to consider other options that had been released or were coming in the near future that offered more competition to the PRE. Palm shot themselves in the arse by giving Sprint exclusive rights for the time that they did.
I too blame the Sprint Exclusivity.
I'd have bought a PRE on Verizon, but I got a Droid in the meantime. Good call Palm...
I've been a Palm/Visor user for a long time. I personally don't like the cloud scheme used with the new devices. I keep some sensative data on my device and have no control over the cloud security. So I've decided to keep my TREO 755 until it croaks then buy an Android powered device. Palm really has lost their market. They are like Sony was with the Walkman, they let the competition steal their market share from them due to a failure to innovate newer versions of their product. Palm has lasted this long only because of their long list of Applications supported by PalmOS. Now that WebOS is here even that advantage has been removed. It's sad to see this happen, first they abandon the expansion principle that made the first hand helds so usefull. Now they have shot off their other foot with this cloud stuff and lack of support for legacy apps, Maybe Bozo can front them some more cash to lose.
WebOS looks like a nice mobile OS, but it has been extremely slow to get the products to market that made Palm OS successful.
WebOS was built to cater to entertainment users, same as the iPhone OS. Multi-tasking and the business functions are a native feature of Linux based Android and Windows bases Phone 7, with entertainment added to sell more phones. Unless Palm understands which audience to cater to, don't expect them to make a comeback.
I'm sure now that it is on Verizon, they could run their commercials again, and hope to strike a cord with Verizon customers. Last I checked, there wasn't anything that great on Verizon anyways.
I thought the Palm Pixi commerical was pretty good too:
http://www.youtube.com/watch?v=PbcnH0h69NY
They need to rerun those commercials.
Can we please hear the death knell for "laser-focused" or "focus like a laser beam" in corporate management speak? Whenever I hear that I just get the feeling that they don't have a clue of what they are talking about. Oh, and then when they say "your management will work with you to ..." like it's the workers fault that things aren't going well. Hey spatula heads, you guys are making the strategic decisions, not us. Don't bother pulling me into your circle jerk to blamestorm your way out of it and into your yearly bonuses.
/management rant
Love how they are blaming Verizon, a HUGE carrier that is doing quite well for their phone not selling.....
I'm convinced that the gods are against Palm.
Apps are where it's at, from games, to useless garbage, you need Apps. Even Blackberry, my business phone of choice, launched an App store/tracker last year (App World).
I'm not an iPhone fanboy, but let's face it, they changed the mobile market. Of course, the evolution of hardware made that possible.
If you can't consisntently entice people to make software for your device then you are on sinking ground.
due to competition from android,iphone
I don't know about their sales in the states bu in EU customers are punishing them for not realeasing at the same time as in the US. Knowing that their product is inferior to Apple's 3GS they should have launched first cheeper and worldwide. Another match won by Jobs by KO, although they actually knocked themselves out I think.
Their advertising sucked pretty bad. those commercials were just retarded
If Android didn't exist, they would still be in this position. The iPhone alone was too much for the Pre.
Hmm.... so much speculation as to why. Ponder if you will....
http://www.precentral.net/webos-mo [...] o2-germany
André Krause, CFO for O2 Germany, called the Pre "The most successful smartphone at O2."
One problem is that Verizon Wireless didn't even mention the PrePlus on their website until the day after it was released.
I may upgrade to a Pre once my Verizon contract allows me get a new phone, but that's still a few months off.
Maybe because your marketing campaigns were shyte...
(albino woman in the sky shows you multitasking! smrt)
The market is flooded with entirely too many choices. A lot of the devices out there are not awe inspiring. In fact they're mediocre.
For me the build quality just isn't up to scratch.. it looks and feels cheap. Who wants a tacky cheap looking phone?
I love my palm pre, i bought my wife and my mother one. The only reason its not that successful is the initial release wasn't up to par, and their pr department sucks. Lets face it: its a good phone, its easy to use and the web experience is on par with the iphone; Why the hell don't they advertise that?? The medical apps are coming, albeit slowly. All palm needs to do now is actually advertise what the phone does and get a newer model to market come june.