Why the Palm Pre Will Fail

Pre is not ready for business, can't top the iPhone for consumers and is entering the market at the worst possible time.
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I know, I know. Apple iPhone: old and busted. Palm Pre: new hotness. Palm's new phone will be June's flavor of the month, etc.

The Pre will have smartphone enthusiasts squealing with delight at its feature-rich and innovative user interface, which appears to do everything the iPhone does plus a gazillion things the iPhone can't do.

Multitasking, for example. The Pre also has a real keyboard, faster hardware, a better camera with flash, a removable battery and a carrier that's not AT&T. An optional, no plug-in inductive charger is just plain cool. The Pre even has something for the vain: A mirror for seeing how awesome you look, located on the top back when you slide out the keyboard.

The Pre is great! Too bad it will fail.

How to Predict Market Success

The way to understand Pre's inevitable failure is not to think about how good the phone is compared with other phones. That's useful for picking your own handset, but useless for predicting market success.

The formula for predicting success is to identify what kind of person will buy each handset model, then count the warm bodies in each category. Subtract the market share you expect will be taken by competitors. And finally, you need to factor in the business execution side -- the stuff that analysts like to focus on and gadget enthusiasts like to ignore.

Pundits predicting Pre's primacy are assuming the phone will succeed in both business and consumer spaces. Why? Because Palm is strong in business, and the Pre has all kinds of entertaining goodies that consumers will enjoy.

I'm sorry, but that's wrong on both counts.

I think it's more accurate to divide users into not two but three categories: business users, consumers and power users.

Businesses need secure phones capable of running proprietary apps that hook up with company databases. It takes years to cultivate customers in this market and to get enterprises committed to writing their mission-critical apps on a specific platform. Microsoft, RIM and, yes, Palm dominate this market.

But like the iPhone, the Pre will not succeed in the business market any time soon, and Palm knows it. Palm's 22-page Pre Business Launch Guide distributed to Sprint employees warns that Palm "can’t afford to sell the Pre to the wrong customers."

Who are the "wrong customers"? Well, according to Palm, it's "IT-centric business users." But isn't "IT centrism" the very quality that separates the business market from the consumer market?

When confronted with an "IT-centric business user," Sprint employees are asked to blow the dust off of that old Treo in the corner and try to sell that instead. The Treo is old, but at least it runs an OS the IT folks have seen before.

The Pre runs the brand spanking new webOS. Big IT shops want stability and compatibility, but Palm changes operating systems like underwear.

OK, forget business for now. The Pre will succeed in the consumer space, right? Well, no, actually. The consumer category includes teenagers, college students, parents -- OK, just about everyone. These users are looking for something brain-dead easy, but packed with toys and entertainment.

The Palm Pre UI is slick and appealing, new and innovative. But in the mass consumer handset market, only three things count: Brand appeal, simplicity and apps. And on all three counts, Apple clobbers Palm. That's why iPhone has destroyed every other "better" phone that has come along.

Palm's Synergy feature allows users to pull together contacts from multiple sources, and maintain threaded conversations across SMS, GTalk and AIM. Cool for tinkering geeks, but will your mom use it?

Gestures are less intuitive than iPhone's. 3D game development is poorly supported in the webOS SDK. The UI is feature rich, but complex and only semi-intuitive for average users.

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Tags: iPhone, cell phone, Palm Pre

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