Cell Phone Music

Palm's buzzworthy Treo Pro is merely a flotation device for the struggling company as it readies its next smartphone coming 2009, an analyst says.

Since 2006, Palm's U.S. marketshare has declined each year, and the Treo Pro won't reverse this trend, said Tero Kuittinen, a telecom analyst at Global Crown Capital. And after this phone, Palm has one more chance with its next big release, he added.

"At the moment, Palm is just trying to keep the company going before this hopefully revolutionary new device arrives," Kuittinen said.

He said the Treo Pro's major downfall is its pricing in the United States, where Palm is only offering the smartphone for $549 -- unlocked and without carrier subsidy. He explained that the handset's lack of subsidy will turn off many consumers, especially when taking into consideration Apple's recently slashed prices of the tremendously popular iPhone 3G.

"The problem here is the pricing structure has changed: the iPhone went down to $200; the Samsung Instinct went down to $230," Kuittinen said. "This is no longer the same phone market we had a year ago."

However, Phil McClendon, Palms' product line manager, insisted that the Treo Pro will be a tough contender against other popular devices. He explained that the iPhone is designed for casual consumers, while the Treo Pro focuses on business users. As for competing with Research In Motion, McClendon said the Treo Pro has software and networking advantages that make the handset more convenient than RIM's BlackBerry.

Despite Kuittinen's criticism regarding lack of U.S.-carrier subsidy, McClendon defended the decision, saying users would appreciate the freedom to use the Treo Pro wherever they wanted without having to enter new contracts. 

Nonetheless, Nielsen Mobile's research illustrates that Palm is constantly heading downward, and Kuittinen said Palm needs to wow the phone market in order to get its groove back.

Just what does Palm have in store for us next? Little is known about Palm's upcoming phone other than that it will feature an entirely new platform and new hardware. McClendon declined to disclose details, but it's interesting to note that just this year Palm hired Jon Rubinstein, a former Apple engineer instrumental to the creation of the iPod, as its head of product development. Perhaps Rubinstein will lead Palm to introducing the next revolutionary device?

Whatever the case may be, Kuittinen suggested that the next Palm device features a larger screen. He said the Treo Pro's 320-by-320 pixel screen is still too small compared to the iPhone's 480-by-320 pixel screen. And a major reason the iPhone is so popular is its large screen makes web browsing a convenient experience, he explained.

Speaking on the subject of Palm's next platform, Peter Hoddie, president of mobile software developer Kinoma, said in order to revitalize itself, Palm also needs to offer a suite of new, innovative applications.

"Operating systems don't matter to most customers," Hoddie said. "What matters to them is what they can do.... Why do [people] love iPhone? They love the apps. Why don't people love Windows Mobile? It's in fact an amazing operating system ... but the apps on top of it? Not so inspired."

In any case, Kuittinen said consumers should feel excited about Palm's next offering, considering its new leader's repertoire for revolutionizing hardware.

"It's really exciting; it's one of the biggest mysteries right now," Kuittinen said. "What are they going to do?"