iPhone and the Future of Palm

I have already written a few pieces on Palm over the last 2 years:

Before the iPhone was announced:

* PALM to the boonies
* PalmPod

After the iPhone was announced:

* Palm’s Turnaround Formula
* Should Dell Acquire Palm?
* Palm Changing Hands?

In the context of our more recent discussion about how the introduction of the iPhone would impact the eco-system, let’s now discuss Palm further.

Analysts tend to agree that Smartphones is where the growth is. IDC says smartphones are growing at a rate of more than 46% each year, compared to standard mobile growth of 21%. IDC predicts smartphones to account for 250 million units by the end of 2010, while Strategy Analytics estimates 300 million.

On the OS side, Symbian dominates, but its market share is eroding, with Microsoft Windows Mobile and Linux gaining ground. We discussed this in detail in several previous posts on RIM,
Motorola, Nokia, and the laptop industry. Palm itself is moving away from its own Palm OS, and towards Microsoft, further accelerating this trend.

I have also said earlier, that the positioning of the iPhone is against the laptop, not a phone. In fact, a full-scale OS is THE key issue on the iPhone, threatening the laptop vendors: HP, Dell, Lenovo, etc.

Palm has a lot of relationships, and a good implementation of Windows Mobile phones. This makes it the most valuable as an acquisition target for those laptop vendors trying to defend themselves against this positioning in the long term, and those who do not have any existing mobile carrier relationships to get into this game easily.

That would be Dell. That would also be Lenovo. That would be, to a lesser degree, HP. That would most certainly not be Motorola or Nokia.

There is an issue with Dell. Motorola’s former mobile GM has been hired as a head honcho there. This guy hates Palm, and may go for RIM instead, leaving Palm’s options somewhat more limited, to HP and Lenovo. Palm’s former marketing chief, Satjiv Chahil, is at HP. But Lenovo could also be a very interesting exit for Palm, and I do believe going at it alone will be extremely difficult for them at this point, unless they really change their strategy and go for a hardcore enterprise play as I explored earlier, or go for the lower-priced emerging market killer app strategy.