Columnist: Palm may be headed for a fall

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Bradley Johnson, deputy editor of Advertising Age magazine , writes in his latest column that Palm could end up "only" as successful as Apple, despite having sold over 14 million personal digital assistants (PDAs). Why? Microsoft, of course.

"Palm is in trouble: Revenue in its most recent quarter tumbled 47 percent," he writes. "The stock is down 98 percent from the peak it hit the day it went public last year. Palm's CEO exited this month. Microsoft Corp. is gaining ground."

In forecasting dark days ahead for Palm, Johnson says one of its failures was to "aggressively license its software to consumer electronics and computer makers far and wide." In this way, the company is like Apple, he says.

"Apple, enamored of profits on its hardware, for years refused to license its software to other computer makers," Johnson says. "Eventually Apple relented, creating a competitive market for Macs -- but only after Microsoft had made its improved Windows the industry standard. Then Apple, not happy that Mac clones undercut it on price, stopped licensing its software. Apple today is a minor niche brand; Mac could have been Windows. Palm is in danger of being the Macintosh of its space."

Palm still has 54 percent of the PDA market with Microsoft's Pocket PC accounting for 24 percent, according to market researcher Gartner. However, Gartner analysts say Microsoft and hardware licensees (Compaq, Hewlett-Packard, Casio and others) could snare a 30 percent share over the next year. Johnson said that Palm still has one potent weapon: its brand name.

"There's talk Palm could get bought again after going through four sets of owners -- startup; U.S. Robotics; 3Com; independent. Palm has endured continual management change," Johnson says. "The jobs board on Palm's Web site last week listed 11 openings. Palm forgot to list one: CEO. Palm, for now, leads its market. It still has a chance to keep its lead by pursuing aggressive licensing. But time is running out. It would be a sad thing to see a great brand and great product lose."

This story, "Columnist: Palm may be headed for a fall" was originally published by PCWorld.

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