Friday, December 11, 2009
"The Palm Pre is no iPhone Killer..." Blah, blah, blah.
The moment Palm birthed the Pre into this world, it was immediately thrust into the shadow of a giant. Much like David facing Goliath, Palm's Pre stood toe-to-toe with Apple's colossal iPhone. Although this analogy has been used time and again, people - including those who should know better! - expected the Pre to be a Goliath from the outset.
Well, it's not. Try a pre-pubescent David with zits, and you wouldn't be far off. Tired and seemingly hopeless biblical references aside, I think that Palm is in pretty good shape.
Allow me to explain my logic here... after the break!
I've had to field the endless barrage of people saying "the original iPhone sold 500,000 units in the first weekend, while the Palm Pre has sold only 50,000!" Well yes, that's true: in terms of raw numbers, the Pre's launch weekend paled in comparison to the iPhone's gang-buster launch. In fact, the iPhone 3G sold one million units in its first weekend, while the Palm Pre hadn't quite reached a million even after a full quarter of sales. To those who say the Pre is therefore a failure, I say this: you're comparing apples to oranges. Here's my answer to all that "#palmprefail" nonsense:
Think back to July 2007...
When the iPhone originally launched, these were its competitors: aging Palm OS devices, boring Blackberries (no disrespect), and a smattering of feature Nokia phones, most of which weren't subsidized on most U.S. carriers. Plus, the economy had not yet been hit by massive bailouts and layoffs. On top of all that, Apple was riding on the wave of their hugely successful iPod product line and massive existing user base. The iPhone had also been heavily advertised and rumored up to a full year prior to its launch, and even got a sweetheart promotion during the Academy Awards. Apple was also enjoying a comeback in the computer world, releasing their eye-candy systems and matching peripherals. Put together the ingredients of: 1) a non-existent competing market 2) awesome advertising, 3) good economic times (compared to NOW, anyways) and 4) a known product name, and you suddenly have the makings of an explosive device launch. With the planets aligned, Apple timed and executed their launch perfectly. The iPhone sold for $600, and still it was a smashing success.
... Notice how in that entire discussion there is no mention of an App Store? None. Because it didn't matter.
Fast forward to June 2009...
iPhone is king, with 60,000 apps, about to launch its third generation device, the 3GS. Blackberry has the Storm, Curve, and Bold, with their App World. Google has the G1, with a growing Android Market. On the lower end, a smattering of touchscreen feature phones... the landscape has totally changed. Oh, and by the way: the economy's in the tank.
Meanwhile, Palm is but a shadow of its storied past (we're talking under two bucks a share, people!). They have a great idea (webOS), secure some start-up capital, swipe a few rogue Apple engineers, and design the Palm Pre. But Palm has nowhere near the resources, advertising budget, and -- as is becoming painfully clear -- the marketing know-how of the Apple Machine. They launch the phone in one country, on one carrier. In its first weekend, the Palm sold an estimated 50,000 Pre units. In the first quarter of sales, it was estimated Palm sold about 800,000 units.
Despite the history I've just described, many people (especially blind iFan "journalists") have dismissed the Palm Pre as dead in the water because it did not "kill" the iPhone's sales numbers. ... My answer is... and pardon the necessary vulgarity: "are you f***ing kidding me?!"
Folks... let me make one thing very, very clear:
There is no such thing as an iPhone killer.
Not the Palm Pre, not the HTC Hero, not even the highly vaunted Motorola Droid. Not anytime soon. Why? Because the iPhone is much more than a phone: it's rightfully achieved pop-culture status... the "Kleenex" or "Windex" of the consumer smartphone market, if you will. Now, that's not to say that Kleenex is the best brand... because phone versus phone alone? There are many who would say the Palm Pre is superior to the iPhone. But an iPhone killer? None exists.
Sprint CEO Dan Hesse recognized this. When he was asked if the Palm Pre was making a dent in iPhone sales, he naturally balked: "... you can almost put the iPhone, to be fair, in a separate category. The Apple brand and that device have done so well, it’s almost not… it’s like comparing someone to Michael Jordan." ... Perhaps not the wisest choice of words (iSheep "journalists" had a field day with that one), but in essence he merely stated the obvious, and gave Apple their proper credit... basically everything I've said here in a nutshell! As for Palm? They no doubt were cognizant of this long ago.
Still not sinking in?
Let's try a more appropriate comparison to bring it all home...
Putting it into perspective: Palm Pre vs Google G1
Google's G1 phone launched with considerable fanfare less than a year before the Palm Pre on T-Mobile. Even in this matchup, Palm is still at quite a disadvantage: when the Pre launched, they certainly didn't have the name recognition or the resources that Google had when they launched their G1! And yet... and yet... The Palm Pre beat the G1 in first quarter sales. The G1 didn't reach a million units sold until six months after launch. It's estimated the Palm Pre reached a million units as early as four months after launch.
Google's second generation devices (myTouch, HTC Hero, Motorola Droid) are doing considerably better. The Droid, riding a heavy advertising blitz after being launched by THREE companies (Verizon, Google, AND Motorola) reached a million sales in 4 weeks. Not too shabby, but that's with a year's headstart, and again, with considerable backing from three big companies. So before you're tempted to compare the Pre's sales to the Droid, it's crucial to remember the Google phone's humble beginnings. By all accounts, if one were to extrapolate that Palm could duplicate Google's success (assuming they play their cards right), then they're off to a darn good start.
So where does this all leave us?
I'm not sure. ... Let me explain myself: I'm not making excuses for Palm, here. The world of business lives in the NOW (how appropriate, @Sprint!), and doesn't care about sob stories. However, taken into appropriate context, Palm Pre sales have done well and actually exceeded many expectations. Whether or not all this is enough to keep Palm afloat (they dug themselves a deep hole long before the Pre came around), I cannot say. Dammit, I'm a doctor, not an economist.
All I'm saying is that people who gauge the Palm Pre's success or failure based on its relative sales versus the iPhone or now-more-mature Android OS devices are using really myopic, flawed logic. It's a shame that tech journalists/analysts don't recognize this, and an even bigger shame that many investors take what these clowns say at face value. The only metric that truly matters is the financial reports from Palm. Period.