Report: Palm laying off workers, disappointing Pre sales may be to blame

Thu, Oct 1, 2009

Finance, News

Palm has started laying off employees as a cost saving measure in the face of lower then expected Palm Pre sales, according to a recent blurb on CoolSmartphone.

Since Palm first introduced the Pre to the public at CES 2009, the Pre, rightly or wrongly, has been typecast as a true competitor to the iPhone.  The Pre’s UI is undoubtedly slick, but a number of issues – such as poor battery life, a lack of applications, and a high pricetag – haven’t done much to help the Pre give the iPhone a run for its money.  Being relegated solely to Sprint surely doesn’t help either.

Also problematic are reports which call into question Palm’s hard sales data.  Specifically, Palm’s 10k filing with the SEC counts all shipments of Pre units to stores like Best Buy as actual sales.  There’s not a legal issue in doing that, but if Palm Pre’s aren’t moving out the door, doing so greatly inflates the perceived number of Pre’s actually in the hands of customers.

Moreover, analyst David Ellers estimatesthat there’s enough Palm Pre’s back logged in retail inventory to last for an astounding 11 weeks.  By way of comparison, Apple’s stock of iPhones are typically set up to last for 4 weeks before new shipments come in.  While Palm is still getting paid for the phones languishing in retail inventory, this inventory delay doesn’t bode well for the Pre going forward.

And that might help explain the unusual number of price cuts surrounding the Pre since it was first released early last Summer.

Palm and its partners have aggressively been lowering the price of the Pre in recent weeks in an apparent attempt to boost up sales.  Just 3 months after its initial release, Sprint lowered the price of the Pre to $149, down from a previous asking price of $199.  Meanwhile, Amazon is already selling the Pre for $99 while Walmart recently introduced a special offer that priced the Pre at paltry $79.  This stream of price cutting is great for consumers, but clearly isn’t a good sign for Palm who is counting on strong Pre sales to help restore the company back to relevancy.

Incidentally, the Pre’s latest WebOS update doesn’t restore iTunes syncing functionality.  Point: Apple.


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5 Comments For This Post

  1. Jordan Lund Says:

    I was excited about the Pre until I actually held and used one. The screen is nice, the interface is nice, but the phone feels like a cheap piece of crap. I’m no iPhone snob either, my phone of choice is an ancient Kyocera slider. (

    But seriously… the Pre feels exactly like those fake shells they have on display at Best Buy.

  2. DainLa Says:

    Total nonsense.

    Keep trying fanboys

  3. steb0ne Says:

    The plastic on the Pre does feel kinda cheap, but I’ve had a Rocketfish protective hard shell on it since purchase and it makes it feel a bit more sturdy. But all the complaints surrounding the hardware, can be easily fixed in new versions. The OS and UI is a great start to what should be a great platform. I guess these so called experts aren’t smart enough to do their research regarding sales, and just reprint what other stories got some views. And the so-called trouble in the developer community was 1 developer not following the same guidelines that all the other developers follow. I’m not a developer, but I’ve lurked around long enough to kno that the developer community for WebOS is fantastic!!! But personally, I wonder who buys a phone for the way it “feels”? Its all about what it can do isn’t it?

  4. Jason Says:

    It would help if they used a decent provider. Seriously… Sprint…

    I say jump off that sinking ship and get a contract with Verizon.

  5. Scott B. Says:

    Some of these responses just make me laugh, The Pre is a miserable failure and the numbers show it as proof.

    What folks are trying to defend is the numbers that Palm released Counting the Shipments to distributors as sales, It is not a normal practice and is stacking the deck in there favor but it fails.

    Palm has failed with their supposed iPhone Killer, you can point out this to Palm Apologist’s and supporters they will not admit defeat, But the truth is Number Don’t Lie and sales are slowing.

    Below Article and link-
    NOTE: “Not my Choice for News, But “WSJ” has been a staunch supporter of Palm Early On, But Now has seen the Truth In Number’s”

    Form Wall street Journal –

    “(For the quarter, Palm reported a loss of $164.5 million, or $1.17 a share, compared with a loss of $41.9 million, or 39 cents a share, a year earlier.

    Revenue was $68 million, compared with $366.9 million a year ago. If Pre revenue weren’t deferred, revenue would have totaled $360.7 million.)”

    Link to Article:

    No Matter What, Proof is in the Numbers, you can’t keep stacking the deck to make yourself look good Palm…

    You will get called out for FUD.

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