No one is going to save Palm, says Jean-Louis Gassée in a blog post. We think he might be wrong.
Jean-Louis, now a VC, was the founder of Be Inc, the company that is best known as the one Apple almost acquired in the 1990s. We’ve paraphrased his basic points:
- Palm’s balance sheet is crushed beyond repair. It has too much extra inventory and borrowed money.
- Investors hope it will get acquired, but it won’t. And that’s the only reason the stock isn’t at zero.
- Investors think a newcomer might want to buy the brand, replace the people and put out new products as a beachhead into the smartphone market. But that’s what already happened when Elevation put Jon Rubinstein and other Apple refugees at the helm. Who in their right mind would try that again with the same, even more damaged brand?
- The people who might buy it either don’t want it or don’t need it. The smartphone OS race is so cutthroat right now that new entrants would be crazy to get in. And while WebOS is nice, neither Nokia, Google, Microsoft, RIM or Apple need it or think they need it.
Here’s why Jean-Louis is wrong and there is hope left for Palm:
- The technology is really pretty cool. Both the hardware and the WebOS platform are very impressive, and in some cases ahead of the competition (multitasking, gaming, contacts management). That’s definitely worth something to a company’s smartphone product portfolio.
- The people are also good. Jon Rubinstein might not be the best CEO of an independent company (then again he faced daunting odds from the start) but he’s demonstrated time and again that he can build teams that churn out great products. That is also worth a lot of money.
- Plenty of big players in the smartphone space need a shot in the arm.
So, who could or should buy Palm?
RIM is still dominant in the enterprise but it’s pretty much failed at making a product that’s sexy to consumers, and the Palm Pre is exactly at that sweet spot between corporate and private use.
Nokia‘s Ovi platform is very promising but it hasn’t been adopted on a scale commensurate with the rest of the company, and while Nokia is dominant worldwide it desperately needs a boost in the profitable US market.
Google, which doesn’t have nearly enough apps for its Android OS to compete with the iPhone, might profit from integrating WebOS, its established developer base and its gaming capabilities. Plus as Google integrates phone software and hardware ever tighter, it might want to bring some hardware talent in house.
And if it looks like Google might acquire Palm, Apple might want to bid just to spite Google or force them to overpay. In either case, Rubinstein would have to go, but investors would still make out ahead.