Mr Operator: Palm Pre – destined for European failure

Mr Operator is back.

If you’re new to the series, you can read his entire back catalogue here. And a quick overview of Mr Operator’s identity? Well, I could tell you, but then I’d have to silence you in some manner. Mr Operator’s identity is a closely guarded secret. That’s because he’s in an influential position at an international mobile operator. And because he tells like he sees it. No sugar coating here. In his last column, he revealed that Google blindsided most of the mobile operators with their Latitude / Google Maps offering. In today’s column, he’s going to tell you why Palm Pre is 6 months too late to the party.

Over to Mr Operator…

– – – – –

Palmistry is the art of telling a person’s future by reading the lines on their hand. It’s not an exact science – in fact, it’s not really a science at all. Much like forecasting how well a new mobile handset will do, 6 months before public availability.

So many competing forces converge and collude to knock a supposed sure-fire winner off its trajectory to the stars. Coming out so early with very detailed demonstrations of your new device’s capabilities is either a very brave or very stupid move, in this age of quick-fire knock-off OS tweaks. While Apple stole a march with the iPhone, the 2nd (and now 1st) tier vendors have fallen over themselves to get touch devices out there. Yup, the first efforts were pretty dire, but remember in an industry of 12 month development cycles, those dire efforts are last year’s chip paper. The engineers and UI teams have moved on. You just know there’s a lot more where that came from. And where the innovation is in the OS, some changes can be made pretty quickly. No retooling required.

The Pre has (quite rightly) generated a fair old bit of good press for Palm. Like the mad uncle being welcomed home from the wilderness, the mobile industry press outside of the US have embraced Palm once more. No more Windows Mobile, all is forgiven. With some inductively-charged geek fruit and gestures in funny places to liven things up, 3MP + flash, plus some sqeezebox-calendar eye-candy and a removable battery, the Pre is everything to your inner geek the iPhone 3G should have been. But will it be enough?

European consumers just don’t know Palm. Even road warriors only have vague recollections of a monochrome device their IT department gave them to log sales notes on the fly, with a tiny stylus that got lost quicker than you can say Ford Mondeo. So can Palm hope to come to Europe and get a warm welcome? The devil is in the detail.

It will require a substantial MNO investment in marketing, which means exclusivity for at least 3-4 months, possibly more. Palm just won’t get the iPhone’s glorious free coverage in the general press.

At a possible RRP of $250 for a 2-year contract, we can guess that the Pre has a BOM [Bill of Materials] similar to the iPhone. All that goodness doesn’t come cheap – the inductive charging block is essentially a gimmick, as they have included a micro-USB port that is probably able to charge as well. If they plan to sell in China it will have to. If the block also did data transfer with a PC a la iPhone dock, now that would be nice. (Sorry, the geek in me getting carried away). Back to reality.

In the current market it’s all about margin, not ARPU (actually it was ever thus, but try getting away with old reporting tricks these days). The Emperor’s clothes are off, with no-one wanting to subsidise functionality that can’t be monetised well inside the churn timeframe. A device like the Pre is going to be a hard sell to consumers with no cash who still haven’t purchased / will never purchase an iPhone, and to MNO’s with even less cash to splash. O2 have reportedly sold a million iPhones, most locked into contracts with another year to run. Will iPhone owners abandon their ‘preciouses’ to take up with a Pre? Made by who? Not_flippin’_likely.

An LED flash, multiple calendars and inductive charger do not a sex/status symbol make.

To The Kids a Palm is something your dad had ages ago (maybe still does). To mums with prams most of the Palm’s business-oriented integration is pointless. To dads on work accounts it will be a bloody hard squeeze to justify in the current climate. Maybe Palm want to be what the Sidekick was 2 years ago. Times change. US kids got SMS religion. QWERTY email just isn’t the killer it used to be, and with 140 characters still annoyingly popular, don’t expect your ma to be clamouring for a mobile email device any time soon.

But the biggest challenge for Palm is in the form of Nokia. Having the glamourpuss E71 loose out in Barcelona to an upstart knocked up in a shed somewhere [the INQ1] has got to have galvanised them onward and upward. The first disappointing touch devices are, again, 12 months R&D delayed. The N86 is a very promising start. Add touch done well, plus the E71’s keyboard somewhere, and you’d have a million-a-week seller. Even if the Pre is twice the device on paper or in the hand, put it on a shop floor next to a QWERTY/Touch Nokia and weep.

I’d love to think I’m wrong here, but I can’t escape the nagging feeling that Palm Pre will arrive at the ball 6 months late, to find others with much bigger names in Europe are already waltzing away with the touch/QWERTY cash.

– – – – –

If you’d like Mr Operator to give an opinion on your company, your product offering or comment on news, drop me a note and we’ll see if we can arrange it.

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33 Responses to Mr Operator: Palm Pre – destined for European failure

  1. constantine March 4, 2009 at 4:30 am #

    Jeff Devine, Senior Vice President of Global Operations at Palm, has been working there for 9 months.

    Where was he before? Nokia.

    What was he doing at Nokia? VP Global Logistics

    How long was he doing that? 13 years and 1 month

    Palm has a winning device, and they have one of the best logistics guys at the helm. Do Europeans remember Palm? As you said, most will not, but then again Apple never made a phone before and all the cool kids in the EU and UK have one.

    The thing about Palm is that unlike Nokia, Palm does not have to sell a million a week, or even a month, to be successful. I don't think it is going to be a zero sum game anymore. Market share percentage points no longer matter.

    Palm is banking on that.

    With all of that said, there are too many variables that could present themselves and sink Palm.

  2. Ewan @ MIR March 4, 2009 at 4:51 am #

    I think it's just as Mr Operator put it, Stefan — the devil is in the detail. Or 'too many variables' as you put it. It looks to me like a rather smart device. I'm not sure if I really need to have one though. Almost everyone I knew in the mobile industry wanted an iPhone, whether to use as a primary device or just to have a play around to marvel at what they'd created. I don't feel that for the Pre, yet.

  3. Matt Radford March 4, 2009 at 5:41 am #

    I'm not sure the Pre is quite so DOA as Mr. Operator believes. One of the most successful phones last year was the INQ1. The Synergy feature of the Pre could be marketed as essentially “Facebook plus” – taking the idea of the INQ further, to encompass all your contacts. That would be a good sell – everything in one place.

    He's right about the timeframe though – everything that's currently special about the Pre can be rolled into other platforms fairly rapidly, so they will need to quickly garner mainstream press and capture mindshare . Right now there's a lot of blogger buzz, but my Mum doesn't quiz me about it like she does the iPhone…

  4. ARJWright March 5, 2009 at 12:36 am #

    Time is indeed the key note here. And Palm will not only need time to make sure that the Pre is as great as needed, but also time to keep themselves afloat financially. I don't know that Palm will make it without another signifiant influx of cash from somewhere if they fumble the US launch.

    That being said, the fact that Palm doesn't have a savory reputation might play well for it. They can build without preconceptions (sorry), and if those variables play into their favor, have something of a niche to themselves until the rest of folks catch up with those integration pieces.

    *I disagree with the hardware focus that Mr. Operator took in this piece; its never about the hardware for devices like this unless the hardware can vanish and expose the goodness of the software – hence the current rush to touchscreen-ful devices.

  5. mroperator March 5, 2009 at 4:24 am #

    What – like the G1 hardware wasn't a 600lb anchor around Android's neck?

    Had the G1 been able to fit in the back pocket of a pair of tight jeans like the 3G iPhone can, they would have sold twice as many. Virtually no women purchased the G1, almost entirely because of the hardware.

  6. MrOperator March 5, 2009 at 5:01 am #

    Another point:

    20 seconds after getting hold of my first G1 I handed it to a female colleague and asked her to type an SMS. She has the fingernails of a normal woman – not talons, but also not trim man-nails. She completely failed to connect with the top line keys on the G1's keyboard, handed it back and said “that's one phone no-one in this office will be buying”

    Hardware is 90% of the sell. OS is something you learn to live with, or churn to a different vendor after 18 months of pain – best example in the world – 4 letters:RAZR

  7. Sally March 5, 2009 at 5:22 pm #

    Are you kidding? Nokia? Seriously. Have you used an S60 device lately? That OS is so long in the tooth it smells as bad as your many overwraught metaphors and similes. Pre isn't about the 3MP and flash, dummy … it's about Synergy, the integrated messaging, and the open architecture of the WebOS

    No wonder so many carriers are about to go under, with guys like you at the helms.

  8. James Whatley March 6, 2009 at 4:11 am #

    “An LED flash, multiple calendars and inductive charger do not a sex/status symbol make.”

    It had me at 'inductive charger'

    😉

  9. MrOperator March 6, 2009 at 5:12 am #

    Hi Sally, Yup, I use several S60 devices, all day long.

    Q: walk into your local mall and ask 100 people what OS their phone uses. If more than 3 actually know, I'll buy you lunch. I stand by my point that 90% of the sell is hardware.

    S60 as it stands on Nokia is Nokia's interpretation of how S60 should look. They decide what icons and menus go where. Other vendors have done it differently. Just as Linux/Windows depend on the UI on top, so does S60. S60 is not 'long in the tooth' if by that you imply irrelevant/tired. It is very well-established, stable and respected. Do you consider the internal combustion engine 'long in the tooth'? Compare Honda and Lada. Both engines use exactly the same underlying technology, but deliver a very different driving experience based on the manufacturer's interpretation. I'm the first to agree with Ewan that S60 by Nokia has dire usability challenges, but as has been repeated time and again, these are only because of the engineering-led UI.

    Q: what made the N95 such a success? S60? no. WiFi? no. GPS? no. It was the 5MP/Carl Zeiss camera, plain and simple. Something consumers could understand in 0.5 of a second, with zero help from the salesperson. Apple lost many non-fanboi iPhone customers because of the rubbish camera. Do they care? No. But it doesn't stop it being true.

    If the Pre was 2MP with no flash, it would rule out 50% of sales offhand.

    Challenge: Explain Synergy and WebOS in 15 seconds, in language a non-geek could understand. If you can come up with that, and make it sound like a must-have that trumps everything else (particularly the BlackBerry Bold), then you can claim fair rights to use 'Synergy' and 'WebOS' as a justifiable selling point. Otherwise all you will do is upset/confuse customers, and the sales staff (95% of whom, bless their cotton socks, are not employed for their technical acumen) will not even go down the geek OS pissing-contest path. Anyway, salesperson recommendation ranks among the lowest of influencing factors in phone purchasing, while brand is the strongest.

    The iPhone sold completely non-tech people without a word, by being stunningly smooth and inviting further exploration by touching icons that were in your face from power-on. I don't see the Pre doing quite the same thing, from the reviews to date. Screen too small, menus too deep. If your argument runs to Palm still having 3-6 months to put more icons in the right places, well, so can other vendors.

    The Pre isn't “about the 3MP and flash, dummy” and I never said it was. It's a *combination* of factors – physical design, touch, QWERTY, camera – that will get customers hooked into further exploration of the device, tariff etc. If you can't catch them in a 10-second appraisal of the spec sheet next to the shop stand dummy, then you'll never get them. Camera spec is a hygiene factor these days, along with battery life, keypad ease-of-use for SMS and tariff.

    I am impressed with the Pre, make no mistake. I used to write on paper using Palm's Graffiti as shorthand, I knew it so well. I was Handango's biggest customer. I really, really like Palm (WM forgiven). But on balance with what is out there and what is coming, I see Europe being a very hard sell for the Pre.

    Footnote: I do claim some visibility of devices / OS tweaks you've probably not seen, under NDA with top handset vendors, so can forgive you for thinking me an old stick-in-the-mud. Unless you have the full picture it's hard to do a good job of analysis / forecast.

  10. Mike42 March 6, 2009 at 5:23 am #

    Yes, but you have also been known to go all weak-knee'd at the prospect of Demand Paging buying you a drink…

  11. James Whatley March 6, 2009 at 5:31 am #

    Ooo stop it, you make me go all faint…

  12. rafeblandford March 6, 2009 at 6:03 am #

    Could we add the importance of the commercialisation routes (i.e. getting stuff into the market)? Nokia's are very well established and added the logistics / supply chain stuff seems to be just as important an ingredient to success. I wonder whether Palm Pre will have the scale to survive (given the money going in) long term. Indeed that argument can be made about any of the smaller players. Are we going to see the market break into 3-4 big players with lots of little boutique players in niches?

    WebOS may be elegant in one sense, but a thin, web technology based, thin-client running on a Linux kernel isn't exactly well equipped to survive the mobile jungle of the future (engineering perspective). (Extra bit to wind up people) Bit like Android – except its a thin Java client..

  13. Matt Radford March 6, 2009 at 6:23 am #

    That's not just a problem with the G1 – fingernails are also the reason my wife won't buy an iPhone. She found texting impossible.

    At least we know that Apple & Google's mobile domination will be curtailed at 49% of the global population 😉

  14. Ewan @ MIR March 6, 2009 at 6:36 am #

    Bit like android, except it's a thin java client? Love it, Rafe!

  15. James Whatley March 6, 2009 at 7:17 am #

    “Q: walk into your local mall and ask 100 people what OS their phone uses. If more than 3 actually know, I'll buy you lunch. I stand by my point that 90% of the sell is hardware.”

    Good point, well made.

    “Challenge: Explain Synergy and WebOS in 15 seconds, in language a non-geek could understand. If you can come up with that, and make it sound like a must-have that trumps everything else…”

    All your contacts, sync'd across all your networks. Facebook, gmail, phone – you name it! Oh and using the web is just like the iPhone..”
    (done)

    “If you can't catch them in a 10-second appraisal of the spec sheet next to the shop stand dummy, then you'll never get them. “
    Not entirely true… and I don't think I need to point out why.

    I think you said it all in your original piece with: “It will require a substantial MNO investment in marketing…”

    Says. It. All.

  16. James Whatley March 6, 2009 at 10:11 am #

    “An LED flash, multiple calendars and inductive charger do not a sex/status symbol make.”

    It had me at 'inductive charger'

    😉

  17. MrOperator March 6, 2009 at 11:12 am #

    Hi Sally, Yup, I use several S60 devices, all day long.

    Q: walk into your local mall and ask 100 people what OS their phone uses. If more than 3 actually know, I'll buy you lunch. I stand by my point that 90% of the sell is hardware.

    S60 as it stands on Nokia is Nokia's interpretation of how S60 should look. They decide what icons and menus go where. Other vendors have done it differently. Just as Linux/Windows depend on the UI on top, so does S60. S60 is not 'long in the tooth' if by that you imply irrelevant/tired. It is very well-established, stable and respected. Do you consider the internal combustion engine 'long in the tooth'? Compare Honda and Lada. Both engines use exactly the same underlying technology, but deliver a very different driving experience based on the manufacturer's interpretation. I'm the first to agree with Ewan that S60 by Nokia has dire usability challenges, but as has been repeated time and again, these are only because of the engineering-led UI.

    Q: what made the N95 such a success? S60? no. WiFi? no. GPS? no. It was the 5MP/Carl Zeiss camera, plain and simple. Something consumers could understand in 0.5 of a second, with zero help from the salesperson. Apple lost many non-fanboi iPhone customers because of the rubbish camera. Do they care? No. But it doesn't stop it being true.

    If the Pre was 2MP with no flash, it would rule out 50% of sales offhand.

    Challenge: Explain Synergy and WebOS in 15 seconds, in language a non-geek could understand. If you can come up with that, and make it sound like a must-have that trumps everything else (particularly the BlackBerry Bold), then you can claim fair rights to use 'Synergy' and 'WebOS' as a justifiable selling point. Otherwise all you will do is upset/confuse customers, and the sales staff (95% of whom, bless their cotton socks, are not employed for their technical acumen) will not even go down the geek OS pissing-contest path. Anyway, salesperson recommendation ranks among the lowest of influencing factors in phone purchasing, while brand is the strongest.

    The iPhone sold completely non-tech people without a word, by being stunningly smooth and inviting further exploration by touching icons that were in your face from power-on. I don't see the Pre doing quite the same thing, from the reviews to date. Screen too small, menus too deep. If your argument runs to Palm still having 3-6 months to put more icons in the right places, well, so can other vendors.

    The Pre isn't “about the 3MP and flash, dummy” and I never said it was. It's a *combination* of factors – physical design, touch, QWERTY, camera – that will get customers hooked into further exploration of the device, tariff etc. If you can't catch them in a 10-second appraisal of the spec sheet next to the shop stand dummy, then you'll never get them. Camera spec is a hygiene factor these days, along with battery life, keypad ease-of-use for SMS and tariff.

    I am impressed with the Pre, make no mistake. I used to write on paper using Palm's Graffiti as shorthand, I knew it so well. I was Handango's biggest customer. I really, really like Palm (WM forgiven). But on balance with what is out there and what is coming, I see Europe being a very hard sell for the Pre.

    Footnote: I do claim some visibility of devices / OS tweaks you've probably not seen, under NDA with top handset vendors, so can forgive you for thinking me an old stick-in-the-mud. Unless you have the full picture it's hard to do a good job of analysis / forecast.

  18. Mike42 March 6, 2009 at 11:23 am #

    Yes, but you have also been known to go all weak-knee'd at the prospect of Demand Paging buying you a drink…

  19. James Whatley March 6, 2009 at 11:31 am #

    Ooo stop it, you make me go all faint…

  20. rafeblandford March 6, 2009 at 12:03 pm #

    Could we add the importance of the commercialisation routes (i.e. getting stuff into the market)? Nokia's are very well established and added the logistics / supply chain stuff seems to be just as important an ingredient to success. I wonder whether Palm Pre will have the scale to survive (given the money going in) long term. Indeed that argument can be made about any of the smaller players. Are we going to see the market break into 3-4 big players with lots of little boutique players in niches?

    WebOS may be elegant in one sense, but a thin, web technology based, thin-client running on a Linux kernel isn't exactly well equipped to survive the mobile jungle of the future (engineering perspective). (Extra bit to wind up people) Bit like Android – except its a thin Java client..

  21. Matt Radford March 6, 2009 at 12:23 pm #

    That's not just a problem with the G1 – fingernails are also the reason my wife won't buy an iPhone. She found texting impossible.

    At least we know that Apple & Google's mobile domination will be curtailed at 49% of the global population 😉

  22. Ewan March 6, 2009 at 12:36 pm #

    Bit like android, except it's a thin java client? Love it, Rafe!

  23. James Whatley March 6, 2009 at 1:17 pm #

    “Q: walk into your local mall and ask 100 people what OS their phone uses. If more than 3 actually know, I'll buy you lunch. I stand by my point that 90% of the sell is hardware.”

    Good point, well made.

    “Challenge: Explain Synergy and WebOS in 15 seconds, in language a non-geek could understand. If you can come up with that, and make it sound like a must-have that trumps everything else…”

    All your contacts, sync'd across all your networks. Facebook, gmail, phone – you name it! Oh and using the web is just like the iPhone..”
    (done)

    “If you can't catch them in a 10-second appraisal of the spec sheet next to the shop stand dummy, then you'll never get them. “
    Not entirely true… and I don't think I need to point out why.

    I think you said it all in your original piece with: “It will require a substantial MNO investment in marketing…”

    Says. It. All.

Trackbacks/Pingbacks

  1. Ewan @ MIR - March 4, 2009

    Mr Operator: Palm Pre – destined for European failure: http://s3nt.com/diwg

  2. Carl Martin - March 4, 2009

    RT @MIReview: Mr Operator: Palm Pre – destined for European failure: http://s3nt.com/diwg

  3. Mr Operator - March 4, 2009

    My latest column has just been published about the Palm Pre: http://s3nt.com/diwg #meetpre

  4. Lars Lindbäck - March 4, 2009

    Is the Palm Pre destined to fail in Europe? http://mtny.mobi/5A. “Like the mad uncle being welcomed home from the wilderness”…

  5. Ewan @ MIR - March 4, 2009

    Mr Operator: Palm Pre – destined for European failure: http://s3nt.com/diwg

  6. Carl Martin - March 4, 2009

    RT @MIReview: Mr Operator: Palm Pre – destined for European failure: http://s3nt.com/diwg

  7. Mr Operator - March 4, 2009

    My latest column has just been published about the Palm Pre: http://s3nt.com/diwg #meetpre

  8. Lars Lindbäck - March 4, 2009

    Is the Palm Pre destined to fail in Europe? http://mtny.mobi/5A. “Like the mad uncle being welcomed home from the wilderness”…

  9. Mr Operator - March 5, 2009

    Posted a response to the Pre Fans and doubters here: http://bit.ly/qyUkd

  10. Mr Operator - March 5, 2009

    Posted a response to the Pre Fans and doubters here: http://bit.ly/qyUkd

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