In a land of cell phone giants, Palm is a mouse.
Palm is tiny compared with Apple, Research in Motion, Samsung, Google, Microsoft  and Nokia, which are battling to control the future of smartphones.
Palm invented the category of a Web-surfing pocket-computer phone with its Treo line in 2002. But more recently, it lost its way in the market as some of its rivals developed more innovative phones. Its new management team, heavily laden with talent from Apple, introduced a new generation of smartphones in June with the Palm Pre on Sprint's network in the United States. The second phone in the line, the Pixi, went on sale in the United States on Sunday.
Both phones received good reviews for being easy to use and great for Web browsing. But in recent weeks, Google's Android operating system for smartphones has grabbed the attention of the American public, as Verizon in the United States heavily promotes the Motorola Droid phone.
While no one expected Palm's sales would rival the sales of iPhones or BlackBerrys -- and they have not -- developers have not rushed to write applications for the phone as they have for the iPhone and Android phones.
A lack of traction could prove important. If the market will have room only for a few smartphone standards, Palm, as the smallest company, could find itself struggling as the perpetual also-ran.
Jon Rubinstein, Palm's chief executive who was the top Apple engineer and the first head of its iPod division, said in an interview that Palm did not need to be as big as its rivals to thrive. His former employer, after all, was long able to carve out a lucrative niche in the computer business.
"One of the key things we need to do as a company is to get to scale," he said. "We need to bring on more carriers and more regions."
Analysts say they expect that Palm will sell an upgraded version of the Pre in the United States with Verizon early next year and add AT&T later in the year. Palm sells phones in six countries and is steadily expanding to others in Europe and North America.
Investors trying to read consumers' moods are unsure whether Palm will prevail. The volatility in Palm's stock is a sign of the uncertainty over its ability to challenge the iPhone and BlackBerry. (Palm's shares rose 8.2 percent to close at $12.40 Friday in Nasdaq trading on speculation it would be acquired by Nokia, a prospect many analysts find unlikely.) (continued...)
© 2010 International Herald Tribune under contract with MarketWatch. All rights reserved.
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