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Rory Cellan-Jones

Palm Pre and O2 - a marriage of convenience

  • Rory Cellan-Jones
  • 15 Oct 09, 08:33 GMT

It's another big week for smartphone launches in the UK.

Blackberry is bringing out a new version of the Storm, the touchscreen phone whose first version received less than stellar reviews, but still sold reasonably well. But far more hangs on another launch - that of the Palm Pre.

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This week I met Jon Rubinstein, Palm's CEO and Matthew Key, head of O2 across Europe, which has the exclusive contract for the Pre.

For both of them this is an important partnership. I put it to Matthew Key that the Pre was a consolation prize after O2 lost its exclusive contract with Apple to sell the iPhone in the UK.

He of course denied that - but went on to outline a relationship with Palm that seemed remarkably similar to the one O2 had originally had with Apple.

It had been love at first sight when he had played with the Pre and now the network was going to lavish the kind of care and attention on this phone that no other product - apart from the iPhone - had received, with a big marketing push and a starring role in its stores in the run-up to Christmas.

But, I asked Mr Key, what about the distinctly dodgy performance of the O2 network since iPhone users started bombarding it with data - won't that be an issue for his new partner? "We recognise we've had some growing pains," he told me, in what I thought was a significant admission.

He said that 02's data traffic had been doubling every three months recently, much of that due to the iPhone, but O2 had been learning about the way smartphones interacted with its network, and was confident of big improvements.

Jon Rubinstein will certainly hope so. He's the man who played a big role in the creation of the iPod which helped revive Apple after its years in the wilderness.

Now he's trying to pull off an even more remarkable turnaround at Palm, and the Pre is crucial to that mission.

It is the first device running Palm's new Web OS operating system, and it's pretty impressive - an attractive shape, easy to use, with a tiny keyboard adding extra functionality to the touchscreen.

And, unlike the iPhone, the Pre allows you to have several applications running at the same time.

But surely, however good the phone may be, it's simply too late. The iPhone has been around for a couple of years - and with Blackberries, Androids, Nokia Symbian devices and Windows phones, there is now a bewildering amount of choice for anyone wishing to do much more with their mobile than just call and text.

Jon Rubinstein countered this argument with a very good point. Early adopters may think smartphones are old hat, but the revolution is only just getting under way. He said:

"We're really at the beginning of this transition from feature phones to smartphones".

Matthew Key chimed in, confirming that just one in 30 mobile users have tried a smartphone so far, so there's plenty of room for growth.

Jon Rubinstein reckons there's room in this market for three to five successful companies - and he believes that it's software, not hardware, which will be the key, giving Palm, with its smart new operating system, an edge.

I'm sure it's true that we're not even at half-time in the smartphone game, which will prove hugely lucrative to the winners.

But Palm, with a brand which is now pretty unfamiliar to the kind of phone users now looking to move into this market, will have its work cut out to make its voice heard above the hubbub.

O2 will be able to move on to another shiny new partner if the Pre fails to deliver - but for Palm, any sign that crowds are failing to storm the shops in search of a small pebble-shaped device could spell doom.

Comments

  • Comment number 1.

    "But Palm, with a brand which is now pretty unfamiliar to the kind of phone users now looking to move into this market, will have its work cut out to make its voice heard above the hubbub."

    Yes and it's exactly those "unfamiliar" dare I say "noobs" they will be preying on.

    I notice you don't mention the "phone home" code in the Pre's OS....

  • Comment number 2.

    I still don't understand why these companies don't have the balls to tell the networks 'sort out your 3G else we won't touch you'...

    Of course, Apple couldn't care less - as far as they're concerned, after-sales support and networking troubles were/are O2's problem and they'd already made their sale - but now the market is flooded with rival products on multiple networks, you'd think all the companies would be clambering for Vodafone exclusivity, what with their data network being the largest and most robust.

  • Comment number 3.

    The video is good and the phone seems pretty good to - i couldn't listen to the audio though as my sound card is dead... so i may be wrong in what i say.

    My only comment would be - could you show more about how the phone actually functions? show what its like sending a message, checking your email, browsing the web, changing profiles on the phone etc.

    The 'look at the shiny shiny' and the touchscreen thing arent really very interesting - i'd rther see how the phone works and how easy it is to use.
    Ta.

  • Comment number 4.

    I notice the main article (and a bunch of other articles in other publications) reference TNS survey data and extrapolate this to say 'Palm Pre is going to be an iPhone killer'. Even a cursory glance at the news from the US has shown this not to be the case: Palm is not divulging sales figures and giving mixed messages to the analysts. It does not look like the Pre is much of a success, and customers will also be put off by the stupid cat and mouse game they are playing with iTunes/Apple.

  • Comment number 5.

    Give me a phone which is actually a phone, one which is robust enough to survive being battered around and doesn't cost the earth.

  • Comment number 6.

    I like the look of the user interface on the Palm Pre, but it will have an uphill struggle against Apple. Apple's marketing campaigns are second to none and they know how to make their products desirable. Palm would do well to align themselves with music stores such as HMV to sell their device and perhaps even enter agreements with HMV/Play/7digital to sell music for the device at a slightly cheaper price per track (which would be of benefit to all parties). This could entice consumers to purchase the palm over the iphone... but in the end marketing is key to success and I have seen very little of the palm pre. When the iPhone was first launched, almost everyone knew about it and that's why it was so successful.

  • Comment number 7.

    Kite09: Get yourself a Nokia 1100, they're fantastic little things.

  • Comment number 8.

    Ewan, I know they are :)

  • Comment number 9.

    I think labelling this an iphone killer is misleading as it doesn't seem to be pitched at the same market.

    For example, the iphones main appeal is surely that it combines a phone with a personal media player. Both the iphone and Pre come in 8GB models but then the iphone also comes in 16 and 32GB which are far more realistic memory sizes if you've been buying music for a long time.

    The Pre will probably be competing against those smart phones whose focus is more on the communication / social aspects rather than the media player aspects

  • Comment number 10.

    In particular the dominance Apple iPhone will mean Palm won't get much of a hold on the 'Smartphone' market. Simple too much time has passed since the iPhone changed the game so to speak, and those who have not yet adopted a Smartphone will likely choose a Blackberry or iPhone over a new comer.

    Sure each phone in this sector will have it's pro's and con's - But at the end of the day they all strive to bring email, web access and various multimedia abilities to a phone. One may have a better camera, a nicer keyboard or more applications available to use/buy - But is it not at the end of the day about image and brand?

    People who buy into Apple seem to be taken over by the hype (yes they are lovely looking machines be it a phone, or computer etc and they do work with reason as should) but it is the device at the heart which is much alike many others out there. You never have, nor I think will, a huge following OF people over any of the other competition as Apple enjoy with the iPhone users. Just as you will never have people loving and wanting the latest Samsung MP3 player, but you will over a new iPod.

    So I fear whilst Palm have put all their eggs into one basket with the Pre, this is likely to be the end of the line. Whilst sale figures have not been made public, the fact that in America the price of the Pre has falled means either they are not selling and is an effort to boost sales, or there is a new version around the corner. I doubt it is the latter.

    I think we all know that when a new iPhone comes out, any inroads the competition may have made shall be once again pushed aside as the clamour to get our hands on the latest Apple phone will go on, especially as with O2 loosing their exclusive deal to sell the iPhone, tariff competition is likely to ensue.

  • Comment number 11.

    @londonrascal

    Your comment would be true if the Nokia 5800 wasn't the biggest selling smartphone in the UK, not the iPhone. Don't confuse hype with dominance.

  • Comment number 12.

    @Mark_MWFC,

    "Your comment would be true if the Nokia 5800 wasn't the biggest selling smartphone in the UK, not the iPhone. Don't confuse hype with dominance."

    That's a very bold statement young man, do you have any proof to back up your claim?

  • Comment number 13.

    While only 16% of people in the UK would like the iPhone, 26% or almost twice as many people in the UK want the Palm Pre. Meanwhile, many more with expiring contracts plan to switch to the Palm Pre. It's pretty clear that the Palm Pre has been gaining popularity just on it's 1st generation release.

    Popular Mechanics has also awarded the Palm Pre as one of the top 10 innovative technologies of 2009. With Pre's wireless inductive charger technology and awesome multitasking capability, the latest iPhone apparently wasn't very impressive.

    While iPhone dazzles their fans with the latest and greatest in Copy/Paste and MMS technology, the Palm Pre will be supporting Flash apps directly from the Web while iPhone will not.

    With Palm Pre's removable battery, physical slide-out keyboard (and Onscreen), 8GB USB Removable Drive functionality, it's clear that the Palm Pre is far superior than the iPhone.

    The question is, will more and more 3rd party developers continue to migrate their iPhone apps onto the Palm Pre to expand their revenue and market? Of course...3rd party developers are in the business of making money and not dependant on the iPhone.

    Palm Pre is only going to get better...as in Palm Pre's in Mexico now include a micro SD slot while UK will now have a GSM (SIM card support) version for international travel. It's only a matter of time for the next generation of Palm Pre improves upon more hardware and features to sell thousands more units and take in more revenue the iPhone should have been earning.








  • Comment number 14.

    "2. At 11:16am on 15 Oct 2009, optimaximal wrote:

    I still don't understand why these companies don't have the balls to tell the networks 'sort out your 3G else we won't touch you'...

    Of course, Apple couldn't care less - as far as they're concerned, after-sales support and networking troubles were/are O2's problem and they'd already made their sale - but now the market is flooded with rival products on multiple networks, you'd think all the companies would be clambering for Vodafone exclusivity, what with their data network being the largest and most robust."

    I think you answered your own question there with your reasoning why Apple didn't do it.

    None of them are interested in aftermarket support because it costs money and time and eats into the vast profits they make before they start to see any return on the investment that is customer support.

    Thus they all leave it to the networks, who are equally as bothered.

  • Comment number 15.

    You know, it really pains me to read all this about Palm. Doesn't anybody remember the great, easy-to-use graphical user interface of the Palm Pilots? I am still using a Palm Treo 650 smartphone - it has a touchscreen, 10,000s of available apps, is stable, reliable, fast.

    But it isn't 3G, of course, just GPRS, and the web browser is not very good for latest content - you can read wb page text readily enough, however, so if you want to find an address, phone number or email via the web, you can, and it is fast. Oh, and when you find a telephone number or email address, you just touch it with a stylus (yes, stylii are coming back, too - Nokia 4800) and the phone or email apps start fast. It's the easiest one-handed phone ever. Touchscreens require two hands.

    As a PIM, it beats Blackberry hands down. I live by my calendar/contacts and the Treo's large, icon-based system means I can look at a month and know exactly what is happening every day, no need for drilling down. I even have two spare Treo 650s 'cos I don't want to be without one any time soon. In fact, the Treo/Palm OS interface is better than all the smartphones I see.

    And I'm not sure about WebOS. Why is running parallel tasks so important? On the Treo 650 it is so quick to switch between tasks (effectively shutting one and opening another by selecting a new app), that I can't see the point. And when you open the prevous app, it is still in the state you left it, so you can carry on.

    The Palm Pre WebOS can run some of the Palm old apps, which is good, but all this concentration on flash, visual and audio stuff is not what I and many business uses want. We want fast, reliable PIM apps - and a good phone, of course. Video and music are fine ancillary tasks.

    Palm needs to get its Palm-friendly user-base tucked up first. It is PIM capablity that turns them on. Why Palm seems to be ignoring this user base is beyond me - unless the Pre's performance is not as good as the old Palm OS (which it doesn't own). Of course, they could always market it to two user groups - youngsters who want to Facebook and twitter and business users who want PIM and email as core capabilities.

    I'll pass on the Pre with slide-out keyboard and early OS problems (yes, they'll be there); I'm waiting for Pixie with exposed qwerty keyboard, ironed out bugs, and an app developing community. Or maybe the phone after that.

    In the meantime, I recommend PIM-serious people to head over to eBay and snap up a Treo 650 while you can.

    I hope Palm succeeds, but more importantly hope that it deserves to succeed with the new WebOS. If anybody from Palm reads this, please for goodness sake talk to the business user community and work to deliver what was already a strong offering (old Palm OS) in an updated guise.

  • Comment number 16.

    Great advert on the BBC for the Pre. Can anyone advertise on here for nothing? You really gave them a tough time - the one and only criticism about not selling as many as the iPhone was really cutting. Paxman must be scared.

    In my own experience, most people have been delaying buying an iPhone because they didn't want to change their network to o2. Now Orange and Vodafone customers are getting the iPhone, but if you want a Pre you are back in old iPhone land and need to move o2; a very odd choice by Palm. I think they would have sold more by giving it to another network a couple of months ago.

    As for the comment above: "Of course, Apple couldn't care less - as far as they're concerned, after-sales support and networking troubles were/are O2's problem and they'd already made their sale" This is simply not true. o2 will send you to Apple's Genius Bar where you get free support directly from Apple, whether that's just a walk through with the phone or a replacement. If you call o2 for support as an iPhone customer, you actually get redirected to the Apple Care centre. However your comment is absolutely relevant for the Pre, where you will have to put up with o2's call centre staff.




  • Comment number 17.

    I think you are all missing the point with the palm pre going to O2. The manufacturers dont just choose a network to be exclusive with based on its 3G coverage! They look at the overall picture. Network capability and coverage is just 1, customer satisfation records, customer services, product range and knowledge, networks retail estates the list goes on and on.

    The O2 3G coverage is slowly improving others are ahead of them, but on the other hand they are so far ahead of all the UK networks as far a customer services goes, their knowledge and product ranges are as good as any out there.

    I have had 3 contracts with vodafone and each time they messed up my billing, and I cant be bothered with indian call centres with orange. T-Mobile just dont cover my house and I would not touch 3 with a barge pole. As an iPhone customer I am looking forward to getting my hands on the PALM PRE when my contract is due upgrade and if I end up staying with my iPhone until a new one comes out most likly next june, either way I wont be moving from O2.

    Whilst I admit other networks have better 3G coverage, O2 is so much better everywhere else and that in my opinion is why PALM and APPLE choose them as their partner in the UK.

  • Comment number 18.

    10 years ago, mobiles, cameras and walkmans were like big bricks...now you can have them all rolled up into one neat device. Who would have thought this would be the norm back then? Share your ideas of the future... The Tomorrow Mural

  • Comment number 19.

    "you'd think all the companies would be clambering for Vodafone exclusivity, what with their data network being the largest and most robust."

    Actuall you are wrong, it's the fastest but coverage wise Orange/Three has the greater 3G coverage if you look at the recently produced Ofcom report.

    ------------------

    "If you call o2 for support as an iPhone customer, you actually get redirected to the Apple Care centre. However your comment is absolutely relevant for the Pre, where you will have to put up with o2's call centre staff."

    Sorry but what nonsense. O2 have a dedicated support team based in Glasgow that deal with iPhone calls. O2 deals with calls that are to do with the network/activation/basic handset support, if there is anything to do with iTunes/advance handset support then Apple take the call.


    The reason some customers are pointed to Apple stores is that if the handset is taken to an O2/CPW store, the handset needs to be sent of for repair which can take around 5 working days for it to be looked at and replaced. If customer go direct to the repair centres (apple stores) then they get replaced, this is usually the case for all phone manufactures.

  • Comment number 20.

    #12 twelveightyone

    I simple google search tells me that Nokia sold almost 4 times more smart phones than Apple in 2009. My search for Nokia 5800 wasn't so conclusive. It is a big seller, and at one point it accounted to almost half of all Nokia smartphone sales, so it's plausible that it is the top selling smart phone at the moment.

    TBH, I know only two people that have the iPhone and both of them regret buying it. Their explanation is very simple, it's too expensive for what it does.

    I'm in the market for a smartphone at the moment, and I'm undecided. A friend of mine bought the Pre, if he likes it, I might give it a go as well.

  • Comment number 21.

    "If you call o2 for support as an iPhone customer, you actually get redirected to the Apple Care centre. However your comment is absolutely relevant for the Pre, where you will have to put up with o2's call centre staff."

    No - you don't.

    If you call O2 as an iPhone customer you are assisted by O2 for every type of problem apart from App Store / iTunes queries.

    "put up with O2's call centres" - their 100% UK based call centres which are very efficient ? Compare that to every other UK network operator who outsources to India and you'll be counting your blessings.

    Before anyone asks, yes I'm ex-O2 iPhone Customer Service.

  • Comment number 22.

    To be honest, I was an avid user of the iphone, and it had a lot of shortfalls in my honest opinion. As someone who uses it for business and communications. I like the multitasking on it and the apps. It has some that are the same. It will take getting use to with the Keyboard but overall it is a faster phone. Its sync Times are quicker and I think it encorporates less of the beating around the bush.

    An example is the Mobile Me. A scandle for what you pay for £60 to be able to locate and share contacts etc. My palm profile allows me to remote wipe and upload my settings, contacts etc to the web for free. Why should I pay for something that is not very good.

    It is already on operating system version 1.3 and the apps have been comming out thick and fast. I think its a fone for the future and I think it will be consistently improving. Alot have said this is mod 1 in actual fact its mod 2 as the states had initial problems and we got mod 2 for the launch. It has been around since July 09.

    Great product and thoroughly enjoying it. No bugs like web pages resetting itself and enables great tooing and frowing between apps

 

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