Foleo: Palm’s $10M mistake

Give Palm Inc.’s CEO Ed Colligan credit for straight talk, which may bode well for the company’s new direction and ultimate survival.
Colligan yesterday delivered a difficult message with a silver lining to Palm’s customers, partners and developers: he’s cancelling the Foleo product, which was nearly ready to ship, to focus on the firm’s next-generation software platform.
Colligan said Palm would take a charge of “less than $10 million” to its earnings due to the move. Palm’s stock rose slightly on the announcement to around $15 per share.
The Foleo, essentially a screen-and-keyboard device, was announced in June to mixed reviews. Tero Kuittinen, analyst at Avian Securities L.L.C., called the product a “Hail Mary pass.” Others were more charitable, but questioned what appeared to be a departure from Palm’s core competencies in the smartphone market.
The Foleo announcement in June was closely followed by word that Elevation Partners, a private equity firm, would infuse Palm with $325 million in cash and two new board members, one with extensive consumer electronics experience. The Palm board now includes Jon Rubenstein, former general manager of Apple Inc.’s iPod division and Fred Anderson, former CFO at Apple.
Apparently, the new thinking at Palm has focused on simplicity of focus, thus Colligan’s message on Palm’s official blog site.
“In the course of the past several months, it has become clear that the right path for Palm is to offer a single, consistent user experience around this new platform design and a single focus for our platform development efforts,” the Palm CEO wrote. “After careful deliberation, I have decided to cancel the Foleo mobile companion product in its current configuration and focus all our energies on delivering the next-generation platform and the first smartphones that will bring this platform to market. Foleo is based on a second platform and a separate development environment and we need to focus our energies on one platform.”
Colligan’s message had generated voluminous reaction on Palm’s blog site by today, with one message capturing a sense of the company’s new focus:
“Wow! This is such a gutsy yet smart decision from Palm,” wrote “Bing.” “I am really starting to have higher hopes for Palm these days.”