MoneyWatch Tech

Palm Is Doomed, and AT&T Just Put Another Nail in the Coffin

By Erik Sherman

Updated on: March 17, 2010 / 1:37 PM EDT / MoneyWatch

Palm (PALM) has seen enough bleak times to write a volume of business blues tunes. And now there's another song in the works: AT&T (T), which was finally going to sell Palm devices, has put the move off from spring to summer. My bet is that summer will turn into fall and finally Palm's winter of discontent. If it lasts that long.

Palm's litany of woe is long and largely self inflicted:

For years the company was complacent. It was late in responding to the Apple (AAPL) iPhone and Google's (GOOG) Android. The market passed Palm by, largely due to the company's inaction.
Palm created its webOS devices -- the Pre and Pixi -- as "bet the company" products. Then it sold the devices through Sprint (S), which is a lightweight compared to its larger competitors. Oh, and had one of the strangest and creepiest advertising campaigns ever seen.
Palm CEO Jon Rubinstein admitted this year that he had never used an iPhone. You've got to wonder about an executive so uninterested that he didn't spend time trying the market leading product.
Rubinstein and crew finally got Verizon (VZ) to sell their new handsets. Only, they didn't sell and Palm lowered its guidance for the quarter. So Rubinstein blamed Verizon. There's business partner management for you.

The collection of mismanagement, poor strategy, and even worse execution has finally created a positive feedback loop of doom and disaster. Palm might have had a chance to revitalize sales -- although without enough money for a strong consumer marketing campaign, you'd have to wonder if anything could help -- by finally getting the new products into the other big U.S. wireless company: AT&T. But now the carrier is pushing off selling the devices until the summer, according to Canaccord Adams analyst Peter Miseku:

"Beyond generally lacklustre handset sales in the current quarter, which are already reflected in our previous estimates, we have recently learned that AT&T has delayed the planned launch of the Pre and Pixi on its network from April to June/July," Misek writes. "Moreover, we believe that this is more than just an ordinary delay, as AT&T has cited a long list of technical issues with the Pre and Pixi. Furthermore, the carrier has decreased its initial order size and has decided to sharply reduce its marketing budget for the launch."

Frankly, why shouldn't AT&T management push the arrangement off and drop the order size? There's likely a new version of the iPhone OS coming out. Android is doing well. Palm has done demonstrably badly through Verizon already. If, additionally, there are technical issues, why invite the customer support problems?

I expect that summer will turn to fall, at which point Microsoft (MSFT) will have Windows Phone 7 devices on the market and will back them up with heavy marketing. What does Palm possibly have left that could interest AT&T? Without significantly increased orders from somewhere, Palm will continue its long collapse and its only hope is an acquisition.

Image via Flickr user Xuan Rosemaninovich, CC 2.0; modifications, .