By following two steps behind, Palm is doomed

Palm is suddenly making some impressive moves. Unfortunately for the handset maker’s shareholders, it’s making them about a year too late.
The Silicon Valley-based manufacturer this week took the wraps off a striking new application storefront that already boasts 5,000 offerings – 10 times the number of apps offered by two-month-old Android Market, according to Medialets. And the company has garnered headlines with news that it will use CES next month to unveil Nova, a smartphone platform designed to bridge the BlackBerry/iPhone gap by “aiming for the fat middle” of the market, according to Palm CEO Ed Colligan via BusinessWeek, thereby combining mobile entertainment offerings with basic business functions.
At first glance, at least, Palm’s goal seems modest: The firm wants to hold onto its 2.1% market share (according to Gartner) of the smartphone market by tapping the booming prosumer market.
But the smartphone space has moved at a breakneck pace in the past year – both in terms of hardware and software – and Palm is two steps behind. It’s vying for traction against the iPhone (which now claims a 12.9% market share, according to Gartner) and Google’s G1, as well as more venerable platforms like Nokia’s Symbian and RIM’s BlackBerry.
The problem is, each of those players is wooing consumers who use phones both for work and for fun. Even if Palm’s technology is jaw-dropping, it can’t touch Apple’s marketing acumen, Google’s name recognition or BlackBerry’s solid reputation – not to mention Symbian’s footprint. And, with only about six quarters of cash on hand, Palm is in no position to back Nova (and the hardware it will run on) with the marketing necessary to capture the attention of the public. Which means the only real hope may be selling devices to existing Palm users – a segment sure to shrink, percentage-wise, as the overall smartphone market grows.
Just as importantly, Palm will have to fight viciously for the attention of developers. Yet another mobile OS will only further fragment the space, giving developers one more platform to build for. That will be exceedingly difficult when Google, RIM and others are offering tens of millions in developers contests and Sprint Nextel and other carriers are courting software engineers by opening development platforms.
Palm was a leading innovator in the early days of mobile, of course, producing PDAs and smartphones that were substantially ahead of their time. Its new storefront is well thought-out and demonstrates some impressive support from the developer community – so far.
But the company now is betting its future by following in the footsteps of the industry’s biggest players. For an underdog already hearing the ticking of the clock, that’s a strategy that appears doomed to fail.