The Palm Pre Will Burst

Written by Harsh Ajmera

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When the Palm Pre burst into existence a few months ago,
the gadget community was shocked: Has-been Palm (PALM) had produced a cool device!

Gadget gods stroked the Pre lovingly at conferences (where they weren’t allowed to
hold it with two hands), Palm investor Roger McNamee predicted that every iPhone owner would immediately switch devices, and Palm’s stock nearly tripled.

AND NOW, FINALLY, AFTER MONTHS OF ANTICIPATION, THE PRE IS ABOUT TO BE RELEASED!

Which means the stock and general Palm euphoria have likely peaked.

The Pre may be a cool device, but it won’t restore Palm to its former glory.

Why not? Three main points:

The Pre isn’t even as good as the current iPhone, let alone the new one. So say the gadget gods.

The smartphone game is rapidly becoming as much of platform game as a device game, and the Pre is nowhere as a platform. As more people buy iPhones and more apps are built for iPhones, iPhones become more valuable to their owners. This creates the network effect that Microsoft Windows users have long been familiar with. Apple is far from having a Windows-like position, but it’s getting there rapidly. And the only companies in a position to derail it right now are RIM and Google.

The smartphone game has become a waltz of elephants, and Palm is just a Jack Russell terrier. In the US, the smartphone war is between Apple, RIM, and, to a lesser extent, Google. Palm can yip a bit and run around nipping at the others’ feet, but it’s too late to become one of the big dogs.

One thing Pre does do for Palm is turn it into a more attractive acquisition candidate. We doubt Apple, RIM, or Google would buy it, but there’s always Nokia, which is nowhere in the US smartphone market.