The company recently pre-announced that it's creating a 3G Treo for sale through Vodafone later this year. This was a very important breakthrough for Palm. It has been trying for years to get broader distribution for its smartphones in Europe, without great success. Now the world's largest mobile operator is embracing the company, and saying specifically that it'll offer the new Treo in at least the UK, Germany, Spain, Italy, and the Netherlands. That's a huge increase in reach for Palm, and it should help to produce incremental sales for the company.
What was Wall Street reaction to the announcement? Nothing. No change at all in the company's stock price.
I don't pretend to understand why stock prices move the way they do. Palm ought to be rewarded for this breakthrough. But there are also some reasons for caution. The first is that this will be a Windows Mobile Treo, not a Palm OS Treo. I believe there's pent-up demand in Europe for a well-made Palm OS 3G smartphone – Palm sold huge numbers of handhelds into Europe, especially Germany, and I'm sure some of those people would trade up to a well-designed 3G phone using the same OS. I'm less certain of the demand for a Windows Mobile Treo in Europe. There are already a lot Windows Mobile devices on the market there, so Palm is entering a crowded field.
Supposedly sales of the Windows Mobile Treo in the US have been disappointing, so Wall Street may be fearing the same thing will happen in Europe.
Of course, it's possible that Palm also has a Palm OS 3G Treo in the works for Europe. Palm doesn't like to pre-announce its Palm OS-based products (supposedly, the only reason it pre-announces the Windows Mobile-based ones is because the US government views any Microsoft deal as a "material event" that has to be announced early to prevent stock manipulation by insiders). The same requirements don't apply to Palm OS-based products, so it's very possible that Palm's going to ship a Palm OS Treo through Vodafone as well.
Regardless of which software ends up on the Vodafone devices, the other thing I'm not sure of is how well the Treo product design will play in the countries of Europe. I should explain this, for the benefit of my readers in the US.
Many Americans make the mistake of believing that Europe is full of Europeans. It's not. It's full of French people, Germans, Italians, British, and so on – each from very distinct cultures with very different beliefs and traditions. Other than the World Cup, I'm aware of only two truly pan-European cultural institutions. One is the Eurovision song contest, and I'm not going to even try to explain that. The other is the practice of displaying your mobile phone on the table during a meal.
Go to lunch or dinner in any country in Europe, and when everyone sits down they'll take out their mobile phones and put them on the table. There's even a proper place to put the phone, about like this:
Note that you don't lay down the phone straight – it needs to look like you just casually dropped it on the table.
Then everyone at the table surreptitiously checks out everyone else's phone. There's a subtle hierarchy of status associated with which phone you carry. I haven't decoded all of it yet, but definitely you get some extra status for having what's perceived to be a stylish phone. Brand also plays a role, although I think that varies from country to country. For example, carrying a Siemens phone is OK in Germany, but will peg you as a cheapskate anywhere else in the western half of the continent. Nokia has good status, depending on the model you carry, and I think SonyEricsson gets you tagged as a little more creative than average. If you have a Motorola it says you're an American.
And then there's the Treo. I've been told by several European friends that slapping down a Treo on the table gets you labeled as a geek. And not a nice geek in the American sense (visionary and probably rich), but geek in the bad sense (socially misfit and physically underdeveloped). The keyboard, which American users tend to regard as a badge of business power and importance, comes across as pathetically computer-obsessed to a lot of folks in Europe. At least that's what I've been told by people over there.
It's possible that image is evolving as RIM and Nokia bring more keyboard-based phones to market. But if not, Palm will have a lot more trouble on its hands than just what OS it's running.
The other question about this hypothetical Vodafone Palm OS phone is whether Palm can even build it. As I've speculated before, it's not clear that the current version of Palm OS can easily be revised to work with the 3G networks in Europe. Now Brighthand has pointed out that PalmSource/Access missed its deadlines for delivering the next version of Palm OS, freeing Palm from a series of fairly substantial minimum payments it was required to make to Access.
If the Access platform won't be available in time, what else could Palm do to fill the gap? David Beers has compiled a lot of evidence indicating that Palm's working on its own Linux-based operating system for smartphones. I don't know if it actually is, but let's speculate irresponsibly for a moment.
Adapting Linux to mobile devices is not as easy as most people think – the OS was created for PCs and servers and doesn't naturally understand concepts like power conservation and limited memory. Palm certainly could be trying, perhaps with help from one of the companies already making working on mobile Linux, but it's not a slam dunk for a company of Palm's size.
We know for sure that Palm is working on a secret new product that's neither handheld nor smartphone. It's also not based on Palm OS, so the software for it must be something different. It could be Windows Mobile, but I'm betting that Palm is creating a new operating system for this new class of device. Would Palm work on two new operating systems at once? I doubt it. So maybe what Palm's doing is creating an OS for its new product category – now far advanced in development – and then adapting that OS to its smartphones as well. That OS might or might not be based on Linux.
If Palm did create its own OS, that would complete the circle of Palm's long, strange evolution – the company would be back under the management of its founders, owning its brand name, and with its own proprietary OS.
Again, I don't know if it'll actually happen, but the idea's kind of poetic, isn't it?
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