Regarding the Pixi: I'm Starting to Worry About Palm

It's this new smartphone that Palm just announced─the Pixi. Is this really the best Palm can do? We've already been hearing that sales of the Pre aren't going so well. And now, hot on the lukewarm heels of the Pre, comes . . . a tiny little phone that I can't imagine wanting to use, even if I got one free.

This is all a bit of a comedown for me─a year ago I really thought these guys had a shot. Last fall I got an early look at the Pre when I was reporting a big feature on Palm's turnaround attempt. That story ran in January, just as Palm was taking CES by storm with the Pre announcement and it really looked like Jon Rubinstein, a veteran Apple engineer, was going to lead this company back from its near-death experience. But by the time it shipped, in June, it was pretty clear that it was not going to be an iPhone killer. And that's too bad, because honestly, that's what Palm needed to do.You can't go against a category killer like the iPhone with a new product that's nice, or maybe even in some ways slightly better than the iPhone (as the Pre is, arguably). Palm needed to blow the iPhone away. It needed to reinvent the category. And, well, it didn't. It made a nice phone. A very nice phone. That's not nearly enough.

Ah, but Palm said, we were never trying to kill the iPhone, or compete with the iPhone. That wasn't the point. Um, right. That's why people close to the company, like Roger McNamee of Elevation Partners, Palm's sugar-daddy investor, were out making noise about how the Pre was so much better than the iPhone. And that's why Sprint ran ads comparing Palm's device with the iPhone. And that's why Palm got itself locked in a stupid tug of war with Apple over whether the Pre could sync with iTunes: Palm tricks iTunes into syncing with a Pre, and Apple puts out updates that break the connection, and so on. Truth is, Palm was always targeting Apple. And when it fell short, it started backpedaling.

The next fallback marketing line was that we shouldn't judge Palm's chances based on the Pre, because the Pre was not the whole enchilada. The Pre was just one device in a family of dazzling devices that Palm was working on, all of them based on Palm's wonderful new operating system, called Web OS. So what does it deliver as a follow-up to the Pre? The Pixi─a teeny-tiny cutesy little smartphone that is smaller than a cup of coffee (see above) and will ship by the holiday season. It has a camera, a keyboard, eight gigs of storage. A touchscreen. It's thin. It's light. Meh.

And, worse than that, guess what? The big brains at Palm chose to announce the Pixi on the same day that Apple was holding an iPod event─on Wednesday of this week. My sense is the Palm folks thought this would be a little poke in the eye to Apple, and that it would be really clever marketing, but, well, it wasn't. For one thing, Palm, get over yourselves. I know a lot of you used to work at Apple, but you're not Apple. OK? You're Palm. You cannot, in any imaginable circumstance, overshadow Apple. Go up against it and all that will happen is you'll get lost in the noise. Which is exactly what happened to the Pixi announcement. It got buried by the resurrection of Steve Jobs and a new Nano that has a video camera.

Palm is going to report earnings next week, on Thursday, Sept. 17. Nobody is expecting very much. But forget about this quarter, or even next quarter. What about the long haul? For this company to bounce back it needs a killer product. So far Palm shows no signs of having one up its sleeve.