24/7 Wall St.

The excitement about Palm’s (PALM) new Pre handset has sent the company"s stock up from $3.50 to over $6. But, the shares have not moved in two days, even with several analyst upgrades.

Palm won’t trade higher until it publishes results of Pre sales or shows a financial benefit from the new product when it next releases earnings.

The big question, which may not be answered for a month or two, is whether anyone will actually buy the thing. The odds are poor.

Pre, the latest also-ran to mimic the tech gadget darling of 2007 and
2008 (AAPL), the iPhone, has an uphill battle.  And, its not just because
Palm has been a lame duck in the smart phone business for two
years.  Whether the claims of intuitive user experience, increased
network speeds, and application use are true, the Pre is
dead on arrival.

Let’s start with the obvious: "You, sir, are no John Kennedy."
According to the New York Times, Jonathan J. Rubinstein, executive
chairman of Palm, meekly pointed out in a recent interview that, "Our
intention was never to build an iPhone killer but to build a killer
Palm product."  Right, and no one wants to lose weight after the
holidays.

Depending on who you ask, the iPhone is successful or a number
of reasons.  First, Apple knows how to make technology simple.
Beginning with the iPod, the iPhone has become the gold standard in
intuitive mobile computing.  Second, Apple knows how to make
technology cool.  Apple’s marketing efforts are legion, and that fact
has only increased with the iPhone.  Third, in much the same way
iTunes moved iPod into the stratosphere.  The iPhone’s "apps store,"
has made the mobile user experience relevant.  Though many will say
that 95% of the "applications" are less than helpful ("I am rich"
comes to mind), there are enough gaming and lifestyle applications
that continue to improve upon the iPhone’s natural utility.  Finally,
it doesn’t hurt to have a virtual monopoly in the online music sales
space.

Add to that the marketing heft of the second-largest cellular network,
and you have a sure-fire winner.  Even if Pre doesn’t want to unseat
the reigning champ of the mobile space,  that clearly isn’t the real
question.  What Wall St. should be asking is whether it can even box
in the welter-weight division.

The Blackberry (RIMM) is, and most likely will continue to be, the entrenched
arm of every corporate mobile warrior.  Despite iPhone’s notable gains
in this sector, Blackberry remains the unmatched champion in this space
and that won’t change soon.  Whether it’s because of the reliability
that users have come to expect or the IT efforts that it would take to
migrate users to a new platform, Blackberry isn’t going anywhere
anytime soon.  And, Blackberry is everywhere it wants to be.  Today,
Blackberries can be used on all of the largest national cellular
networks, including Verizon (VZ), AT&T(T), Sprint (S), and T-Mobile.

Finally, Blackberry is not taking the iPhone-thing lying down.
Although Blackberry’s iPhone-entry won’t have the same cool-factor
that the iPhone enjoys, both Verizon and RIM made a smart move when
they partnered together to push the Storm.

So, where does that leave the Pre?  Palm’s new design doesn’t make it
any more competitive in the business space, where it has been losing
market share for years.  And, it can’t very well compete with the
iPhone, which Rubinstein has thoughtfully conceded.

So, if the Pre can’t compete in either of these spaces, what does it
expect to be?  Maybe in the same place it’s been headed for several
years, as an also-ran.

Sometimes, discretion is the better part of valor.

Ash Allen