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Tech Check
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], running circles around it, far outselling it, and that anyone and everyone who bought an iPhone during the first go 'round would be buying a Palm Pre [PALM
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] next became locker room fodder for the Mac faithful is the understatement of the century. The comments became the Pre shot heard 'round the the blogosphere, and McNamee instantly became a lightning rod for all things wireless. Dozens of websites ridiculed the comments as ludicrous bluster, especially since Palm has yet to announce a release date of the phone and its price tag. Soon after I saw these comments, I emailed McNamee directly to get his take, asking for clarification to see if the coverage was accurate. He thanked me for the heads up but had nothing to say about it.
“You know the beautiful thing: June 29, 2009, is the two- year anniversary of the first shipment of the iPhone,” McNamee said today in an interview in San Francisco. “Not one of those people will still be using an iPhone a month later,” Bloomberg News reported him as saying.
"Dem's fightin' words," I wrote him. To no avail. He wasn't commenting.
But the story seemed to suggest that Palm was on the offensive, that maybe it indeed had a real product and it really was going to be a serious threat to Apple. Why else would McNamee, normally a reasonable, insightful Silicon Valley veteran, say such things?
Well, no one knows. Certainly not Palm which is out with a lengthy statement hanging McNamee out to dry. Remember that quote I posted a few paragraphs ago? Palm's response this morning: "The statement in the second paragraph of the article that 'not one' person who bought an Apple, Inc. iPhone on the first shipment date 'will still be using an iPhone a month' after the two-year anniversary of that day is an exaggerated prediction of consumer behavior pattern and is withdrawn."
"Withdrawn?" What the heck does that mean? He said it. Palm now admits that the quote was uttered, and that it was accurate. And now it's "withdrawn?" Come on. This is a guy whose firm owns 39 percent of Palm. In its "Free Writing Prospectus" filing with the SEC, Palm refutes just about everything McNamee had to say in his lengthy sit-down with Bloomberg. No less than 10, count 'em, 10 corrections and clarifications. The timing is unusual, to say the least, since the comments from McNamee came just a few days before Palm announced it was going back to Wall Street to raise money, to the tune of $83.9 million. McNamee's company, Elevation Partners, received $49 million from the "re-marketing" of some of the shares it owned. The SEC might be interested in that kind of timing as well, hence the Palm filing.
And it wasn't just those choice comments about consumers and Palm's expectations for consumer buying habits. The company also had this to say: "With respect to the statements in the tenth paragraph of the transcript that the Palm Pre is 'going to be a million times – well, not a million times – several times faster' than Apple, Inc.’s iPhone products and is 'going to run rings around them on the web,' the Palm Pre is still under development and it is premature to state the speed at which the device accesses the web or the relative speed of the Palm Pre compared to the smartphone products of competitors."
"Still under development" certainly caught my attention. This is a device that is supposed to be on store shelves in a couple of months. The company's entire future hinges on it. And they're still messing around with its specs and what it's capable of?
Palm certainly doesn't need this kind of headache, whether innocent hubris or something more nefarious. This company's financial back is up against the wall and at this point, I just don't see a way out. Palm is burning through cash at a fever clip. Couple that that with McNamee's ill-timed boostering and you wonder what kind of bubble these guys are living in. I don't get it.
At this point, you have to wonder why Palm is still being so cagey with the release date of the Pre. Having trouble getting clearances on the Sprint [S
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] network? That'd be bad. They're not announcing a price yet either. Does that mean they're still haggling on component pricing — or having difficulty lining up suppliers, or lacking confidence that manufacturers will be able to build this thing at scale? (Or, more optimistically, demand is expected to be so high that Palm manufacturers are trying to build up enough inventory to satisfy it?)
Lots of mystery, which doesn't serve Palm well. Apple gets away with mystery because it has a phenomenal track record of execution and innovation. Mystery generates interest for Apple. With Palm, mystery just means concern and confusion. And that's not good.
Look, I played with the Pre and I was dutifully impressed. It looks and feels like a pretty spectacular device. But it ain't gonna be so spectacular if it's priced at $400. And it ain't gonna be so spectacular if they can't get it out until September. And it ain't gonna be so spectacular if they can't build 'em fast enough. Or they're returned by customers because of quality control issues.
The Pre runs the risk of becoming the equivalent of some kind of automotive industry prototype: Those slick cars that come out during the big auto shows that we all drool over, that the industry promises are only a few short years away, and then we never see them again because they were just too expensive or impractical (or both) to mass produce. And after the splashy unveiling, and the pressure on Palm to do something — anything — to remain relevant, if that's the case, Palm runs the risk of simply going away.
So many questions. So few answers. Palm can't seem to get out of its own way, and McNamee's comments are only the latest example.
The company will crow about its big 9 or 10 or 11 percent move today. But for shares so terribly deflated, and some of the rally due at least in part to a massive, broader rally, and those comments from Palm's lead investor that the company itself says are "exaggerated," you gotta wonder what Palm might step in next.
Questions? Comments?
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