Palm Cut To SELL Because RIM, Apple, And Google Are Kicking Its Butt

jon rubinstein

It’s looking ugly at Palm, whose new smartphones at Verizon Wireless — the Pre Plus and Pixi Plus — are off to a slow start. Shares are down 5% today after getting downgraded by Bank of America/Merrill Lynch and MacQuarie Research.

As MarketWatch reports:

  • “Palm was cut to an underperform — or sell — rating by Bank of America/Merrill Lynch. In a note to clients, analyst Vivek Arya said the company’s newest webOS phones have seen ‘sluggish’ sales since the Verizon sales began.”
  • “In another report, Phil Cusick of MacQuarie Research cut his rating on the stock to neutral, or hold. Cusick also cited ‘weak sell-though’ at Verizon , and noted that interest from other carriers such as AT&T is weak.”

The main problem for Palm is that the smartphone market has become a platform game, which means there are only going to be 2 or 3 big winners. So far, in the U.S. at least, RIM’s BlackBerry and Apple’s iPhone are the top 2, and Google’s Android is making a strong push to be no. 3, with increasing support from all four major U.S. wireless carriers.

While Palm has a technically impressive platform, there’s a lot more factors than technical quality in who will win: It also includes carrier distribution, hardware design, marketing, app quantity and quality, commerce, entertainment and media services, etc. And so far, Palm is not making it happen.

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