RSSPalm to restructure yet again, may cut more jobs
By Scott M. Fulton, III | Published December 1, 2008, 6:59 PM
In what could be its last hope at survival, after the markets closed Monday evening, Palm announced it would implement a program to reduce its costs by another 20%, on top of a program that was already under way.
Last year at this time, Palm trimmed its workforce by about 100, and gambled the future of the company on the success of its low-end Centros. The plan worked, though it backfired in an odd way: Specifically, the success of, and high demand for Centro drove the company's margins lower, which made its expenses weigh more than they would have otherwise.
But this month, Palm may wish it were back at 2007. After the markets closed this afternoon, the company announced it expected to record revenues for its fiscal second quarter just ended that won't top $195 million. This after posting revenue for its previous fiscal Q2 2008 of about $345 million. The reason this time: declining demand for its smartphones across the board.
Palm CEO Ed Colligan issued this statement late this afternoon: "We are seeing unprecedented dynamics in the global markets as economic uncertainty hampers demand for consumer products. In order to ensure Palm's long-term success during these uncertain times, we're taking several steps to significantly reduce our cost structure. These measures will help us navigate this difficult period while launching our next-generation products as planned."
Two weeks ago, Palm announced its latest round of layoffs, and today confirmed that process of attrition is ongoing. However, this afternoon, the company suggested many of those being laid off could be in Asia Pacific, as it transfers responsibility for sales to that region to the US.
Last August, Palm told analysts it would shift its emphasis toward its higher-end Treos, which could presumably earn it higher margins.
I'll agree Palm needs to update more, particularly their database. But when I compared my 755p to the iPhone, the treo couldn't do multitouch, and the iPhone couldn't act as a camcorder.
And of course, the iPhone has a bigger screen, and the 755p has a rather good keyboard. Other than that, we pretty much matched features. Both manage to avoid Microsoft software, which some consider a big plus.
I'm not a big fan of the Centro, as the screen is a tad too small for me.
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|I think Palm's primary success was also the source of its ultimate failure.
In innovating and introducing the concept of the PDA, they also marginalized themselves as the market moved from a standalone PDA to converged technologies where the PDA became but a facet of a more complex integrated device - a process still in full swing.
No longer is the PDA function a strategic advantage. Rather it has become simply one more functional aspect of a more capable device - and they have not successfully enlarged their product mix via either internal development nor by successfully partnering with others who could provide such a strategic enlarging of their offerings.
The Treo, while not a bad unit in itself, is not keeping up with the fast pace of convergence offered by such product as those of Apple, RIM and others.
Not the first, and certainly not the last, more companies content to stagnate in a continually evolving and converging marketplace are going to disappear as well.
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|Former palm customer, never again. sorry, they lost us as a customer.
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|This is what happens when you quit innovating for 5 years.
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|I'm not a fan of the Centros. Still a fan of their classic Palm Treo 550, 600. The shape, the weight, the workhorse OS, were perfect.
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