Monday, March 27, 2006

To make inroads against RIM, Palm steals its strategy

The Globe and Mail reports on Palm's efforts to take on Research In Motion on its home court in Canada. The artilc looks at the challenges building partnerships with the network operators.

Carmi Levy at Info-Tech Research Group noted that "Phone companies are notoriously risk-averse operations." He said, "Palm needs to show the carriers that it has a strong enough platform and that it is worth their time to work with Palm."

Levy points out that "one of Palm's disadvantages is that it doesn't make its own software to push e-mails out to the wireless devices." he thought "The trouble with this model is that Palm forces customers to be IT experts." Levy believed Palm's partnership with Microsoft would "likely pave the way for warmer relations with the telecoms."

With network operators carrying many different handsets, some are more profitable than others. The article notes this "discrepancy causes telecoms to favour some products over others, and the BlackBerry is a frequent favourite."

Rob Sanderson at American Technology Research said, "There is a big difference between supporting a device on a network and promoting that device."

For Palm, "gaining a foothold in the business market is essential for Palm, because the consumer business is fickle." Levy said, "In the consumer market, you're always going to be playing the fashion game. But in the enterprise market, your customers may stay with you for years. If you are just playing in the consumer space, you are doomed."

According to Palm's latest earnings call, "35 per cent of Palm sales came from business customers last quarter, up from 30 per cent the previous quarter." Vivek Aryaat Merrill Lynch attributed the gain to tje "temporary effect of RIM's now-resolved litigation issues."