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Jon Rubinstein (Palm) vs. Steve Jobs (iPhone)

Posted on Friday, Jan 4th 2008

2007 has been a turbulent and eventful year for Palm. A quarter of Palm was bought by Elevation Partners for $325 Million, and Jon Rubinstein, the former Apple executive who was behind the invention of iPod, joined as Executive Chairman.

In my analysis prior to the Elevation deal, I suggested a turnaround formula based on a comprehensive enterprise strategy or a lower-priced emerging market killer app strategy around micro-payments. You can also read my interview with Eric Benhamou in which we discussed Palm’s turnaround challenges, and Elevation’s investment thesis.

However, with Rubinstein’s introduction into the equation, I had to introduce a third opportunity for Palm, which I alluded to earlier in the Trend Radar: Device Usability piece.

Rubinstein and Jobs could not agree on the iPhone’s strategy wrt the Keyboard. This tells me that Rubinstein has a separate but perhaps also compelling vision on how the keyboard needs to be incorporated into smartphones. I can’t wait to see what that vision entails!

Meanwhile, on the product-side, Palm had quite a few ups and downs. It canceled the Foleo which as I said earlier could anyway not help its cause. Treo 755p was delayed which affected its Q2 2008 earnings and a chance for strong holiday sales. Centro, on the other hand, was a dark horse for Palm and it is working hard to meet market demand.

On the financial front, Palm recently reported its financial results for Q2 fiscal 2008 that ended November 30 2007. Revenue was $349.6 million, a decline of 39% y-o-y and 3% q-o-q. The decline was attributed mainly to not shipping Treo 755p before the quarter ended.

I expect 2008 to be a breakthrough year for Palm. Rubinstein needs time to implement at least one product cycle. Centro would definitely help in the interim. Palm’s new OS based on Linux is also expected in 2008.

This stock, trading around $6, is a Buy. It’s just that some more beating may be in order, offering a better buying opportunity. But, for sure, keep an eye out.

Palm, Inc. (PALM)

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[…] John Rubinstein Palm vs. Steve Jobs iPhone – Sramana Mitra on Strategy Rubinstein and Jobs could not agree on the iPhone’s strategy wrt the Keyboard. This tells me that Rubinstein has a separate but perhaps also compelling vision on how the keyboard needs to be incorporated into smartphones. I can’t wait to see what that vision entails January 5, 2008 – Apple, Palm – […]

ReneRitchie.net » myPhone or the Highway - Jobs vs. Rubinstein Saturday, January 5, 2008 at 5:56 PM PT

Sramana,

I did not see the option of Palm being a ripe acquisition target in your blog. Yahoo finance puts market cap at around $ 590 million. This is too low for a fantastic company like Palm

Palm would be a good target for players like Sony Ericsson who don’t have a good foothold in the Smartphone market.

On the other hand a good OS and hardware capabilities in Palm can attract new player trying to enter the handheld market. Companies like Intel have lot of cash to do that.

Let me know what you think…..

Balaji Tuesday, January 8, 2008 at 11:21 PM PT

I have suggested before that Dell should buy Palm.

Sramana Mitra Wednesday, January 9, 2008 at 5:41 PM PT

I can’t see a Palm buy-out from another company after the cash-injection from Elevation.

Chad Garrett Sunday, February 10, 2008 at 1:04 PM PT

[…] my last post on Palm, Inc. (Nasdaq:PALM), I had said that 2008 would be a breakthrough year for Palm’s […]

Palm’s New OS Plans and Apple Poaching - Sramana Mitra on Strategy Wednesday, March 26, 2008 at 8:56 AM PT
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