Verizon rumored to embrace Palm in 2010 to combat iPhone

Posted:
in iPhone edited January 2014
Looking beyond its new lineup of Android-based mobile phones, Verizon is also expected to add Palm's webOS in 2010 to fight off AT&T subscriber gains based on the strength of the iPhone.



In a note to investors released Tuesday, Shaw Wu, analyst with Kaufman Bros., upgraded his rating on Palm stock from neutral to buy. He based the change on a belief that Verizon will carry webOS-based phones from Palm in the first half of 2010.



"Based on our checks with industry and supply chain sources, we have fairly high conviction in Verizon carrying Palm's webOS-based smart phones sometime in 2010 (potentially as early as 1H)," Wu said.



His prediction is based on three reasons: Android phone sales have been initially disappointing, Sprint's exclusivity agreement with Palm is believed to end in 2009, and Verizon has shown "high interest" in webOS, including public comments from CEO Lowell McAdam.



Wu said he does not believe that Android will squeeze Palm out of the marketplace, and that the handset maker has a number of distinct advantages, most notably its multi-touch capabilities and vertical integration.



Kaufman Bros. has issued a buy rating for PALM stock, with a price target of $16.



Last quarter, AT&T continued to close the gap with Verizon in terms of total subscribers. As of October, Verizon had an estimated 89 million subscribers, compared with AT&T's 81.6 million. But in the third quarter of 2009, AT&T added 2 million customers while Verizon added 1.2 million.



AT&T's 2 million customer increase represented the company's highest third-quarter gain in history. Of those customers, roughly 1.28 million were said to be iPhone users. To put the total in perspective, more new customers came to AT&T for the iPhone than the total number of new subscribers gained by Verizon with all handsets during the September quarter.



To fend off AT&T's gains, Verizon has fired back as of late, pushing the well-reviewed Motorola Droid with an aggressive advertising campaign that specifically targeted the iPhone.



In October, Verizon and Google announced a partnership to deliver a number of Android-powered phones to the nation's largest wireless provider. The two companies have said they will co-develop handsets and create new applications.



Additional reports have suggested that Verizon and Apple are secretly working toward the launch of a CDMA-compatible phone in the second half of 2010. Apple's exclusivity agreement with AT&T is believed to expire next year.
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Comments

  • Reply 2 of 106
    pg4gpg4g Posts: 383member
    Is it just me who's getting the feeling that even the phone companies don't know what they're doing to combat the iPhone. Seems like they're clutching at straws and can't find anything else decent.
  • Reply 3 of 106
    Have at it Big Red.
  • Reply 4 of 106
    This would certainly explain the virulent AT&T / iPhone ads that Verizon has been running of late.
  • Reply 5 of 106
    dreyfus2dreyfus2 Posts: 1,070member
    The question is not really if Verizon will sell Palm phones, it is how much marketing power they will put behind it.



    Looking at the facts:



    - The Pre does not really sell well. I know three people who bought it since it came to Europe and they all have returned it after going through 2 or 3 replacement units because of hardware problems (2 of them have an iPhone now, the third one is waiting for the Motorola "Milestone", that's the Droid's name in Europe)

    - Verizon can customize and tweak Android as they seem fit, they can't do that with WebOS

    - They can market the number of apps available on Android, Palm is not even halfway there



    Now add a theoretical Verizon iPhone to the mix... where does that leave Palm? Begging and accepting lower subsidies, running 2-for-1 programs to inflate the stock? I think Wu is too optimistic here.
  • Reply 6 of 106
    I for one think Verizon is horrible. Bad phones, poor service in my area, and not great customer support. I could care less if they ever get the iPhone, because it has no affect on me at all. However, I think this move, and based on the comments of the article, there's little to no chance that Verizon picks up the iPhone. Could change, but doesn't sound it...



    What's funny is that their attempt at the iPhone killer [Droid] has failed. He stated that the sales are disappointing. Why does he think that adding a CDMA version of the Palm Pre, or Pixi [which are also disappointing] will compete with AT&T/iPhone?



    Don't get me wrong, I like the idea of competition. By having some form of competing devices, forces Apple to step up their game, as well as AT&T. I love my iPhone, but the interface, screen, etc. is getting close to being a little long in the tooth...



    However, until then, I don't see any other viable alternatives from any of the carriers.
  • Reply 7 of 106
    ivladivlad Posts: 739member
    It seems like you need 24 different TouchScreen phones to fight one, and even that's not effective. So funny how no one can really make an iPhone killer. Apple can kill any other device but no one can kill apple's.
  • Reply 8 of 106
    Verizon has NEVER understood consumer mobile phone hardware market. They have an amazing network, but the moment it comes to the actual phone... they are blind. They lost me to AT&T after they crippled a Motorola phone that I purchased a few years back. The phone could nativity play MP3s, have ringtones, etc... but with their firmware, you were forced to pay for all of those "luxuries."



    Granted, I still feel that in some respects with the iPhome, but at least there are thousands of very useful AND FREE applications that I can use... I don't need to RE-purchase songs, and my bill is generally the same every month (even if I can't figure out why I'm spending $110+ a month.)



    Let them have Palm

    Palm, and the Pre, aren't making a dent in Apple's numbers. With Verizon... I don't believe that's going to change.
  • Reply 9 of 106
    i own a verizon cell phone and no iphone. i love apple and only use apple products since 1984 (128K) computer,



    verizon has an arrogant attitude that makes them think that they "know it all". their customer service is terrible and their prices are high. but their connections for phone service is unmatched.



    when apple finally gets equivalent connections, my verizon cell phone disappears unless they are an apple service provider.



    and verizon is always going to try and play catch up vs apple technology. people should realize that until the iphone came along that their only cell phone choices would be picking out different colors.
  • Reply 10 of 106
    The Pre has already proven itself to be an also-ran in the smartphone contest. I guess they are just throwing everything against the wall hoping some of it will stick. Why they don't just focus on the Droid, which seems a much stronger competitor to the iPhone is beyond me.
  • Reply 11 of 106
    Remember people, this isn't fact. It's an analysts prediction which is far from a certainty.
  • Reply 12 of 106
    Quote:
    Originally Posted by iVlad View Post


    It seems like you need 24 different TouchScreen phones to fight one, and even that's not effective. So funny how no one can really make an iPhone killer. Apple can kill any other device but no one can kill apple's.



    Right on! The only thing that will kill the current iPhone is the next iteration of said iPhone!



    Reminds me of how the iPod kept improving over the last iPod and no other manufacturer could get any traction!
  • Reply 13 of 106
    quinneyquinney Posts: 2,525member
    Quote:
    Originally Posted by LongDukDong View Post


    http://www.youtube.com/watch?v=TSAXEVXvNz8



    Quinney feeling ill. Massive cellulite make Quinney question strength of floor joists at MSFT store.
  • Reply 14 of 106
    Quote:
    Originally Posted by PG4G View Post


    Is it just me who's getting the feeling that even the phone companies don't know what they're doing to combat the iPhone. Seems like they're clutching at straws and can't find anything else decent.



    I've thought the same thing. The only answer I can think of is it's 'Complacency.'



    It affects large companies/CEO's that think they are 'sitting fat.'



    Think Motorola/Razr, Sony/Walkman, MS/Vista, Palm/PDA, Yahoo/Search, Verizon 'passing' on the iPhone! I'm sure there are many more examples.



    Apple on the other hand, is continually expanding and improving their product line. It's just a different mind set.



    Thoughts?
  • Reply 15 of 106
    Quote:
    Originally Posted by LongDukDong View Post


    http://www.youtube.com/watch?v=TSAXEVXvNz8



    'Super My God' That was painful to watch...I could only handle 30 seconds! MS is the K-Mart of tech!
  • Reply 16 of 106
    Quote:
    Originally Posted by mitchell_pgh View Post


    (even if I can't figure out why I'm spending $110+ a month.).



    Me too!
  • Reply 17 of 106
    nceencee Posts: 836member
    So does this mean Verizon, is not likely to get the iPhone or anything like it?



    I can't imagine that Apple at some point in time, isn't going to say "enough is enough". "Feel free to pick on the network, but leave my Apple products alone!



    Skip
  • Reply 18 of 106
    The pre isn't that bad, and if you're stuck on sprint, there's basically the pre or the hero for smartphones that don't completly suck.. I'd like to see the company turn around. I think they have some good devices left in them....



    The actual industrial design of the pixi is really nice, it just unfortunate that they've underpowered it or that there's some sort of radio bug that makes it uber-laggy. If people didn't have such a hard-on for multi tasking they could probably just make it run one app at a time and it would be a fine phone.. Especially if it turns into a "free" with activation phone kinda like the centro.



    I think the unfortunate thing with palm is the stupid USB VID spoofing stunt with iTunes. Makes them look like a bunch of amateurs. I kinda wonder what the Jobs/Rubinstein dynamic would be like if you put them in the same room together right now.





    That's officially worse than being rickrolled..
  • Reply 19 of 106
    Quote:
    Originally Posted by dreyfus2 View Post


    The question is not really if Verizon will sell Palm phones, it is how much marketing power they will put behind it.



    Looking at the facts:



    - The Pre does not really sell well. I know three people who bought it since it came to Europe and they all have returned it after going through 2 or 3 replacement units because of hardware problems (2 of them have an iPhone now, the third one is waiting for the Motorola "Milestone", that's the Droid's name in Europe)

    - Verizon can customize and tweak Android as they seem fit, they can't do that with WebOS

    - They can market the number of apps available on Android, Palm is not even halfway there



    Now add a theoretical Verizon iPhone to the mix... where does that leave Palm? Begging and accepting lower subsidies, running 2-for-1 programs to inflate the stock? I think Wu is too optimistic here.



    While I agree with everything you've said I think there is also a strategic piece to add here. Obviously Verizon has been impacted by AT&T's iPhone exclusive. Everyone is in agreement, including Verizon, that they want to offer the iPhone, but until recently they didn't have any leverage to strike a deal. Now they are pulling out all the stops, and doing it well. The approach is to hit it from three sides:



    1) Expose the flaws inherent in AT&T's operations. Regardless of whether Verizon is any better or not, just getting people to see AT&T as lame and on the run when they have the upper hand is a shear stroke of marketing genius if conducted correctly, and it looks like it may be working. The press around AT&T's suit is bringing more media attention to Verizon's claims than Verizon's own commercials. Now they have AT&T working against themselves.



    2) Bring out the Droids! It seems like the Android platform has the brightest future if you are looking for someone to compete with Apple's iPhone platform in the long run. Verizon blew it in passing on the iPhone originally because they didn't see the strength in it. They saw it as just another phone, not a game changer. They are now resolved not to be caught again. Smart phones are here to stay and they are now going after it as if their business depends on it, because it does.



    3) Bring on Palm. This is the MOST important piece if Verizon wants to have some leverage with Apple. Yes, everyone except Palm knows this isn't a viable long-term threat, but Palm has done some things right and does hold some consumer attention out there, so just adding it to the mix is smart business. But the REAL genius behind bringing on Palm is that Apple is in a pissing match with them right now. If Apple thinks that Verizon might bring some added life to Palm then there is incentive for Apple to move to Verizon just to show them up. Without iTunes integration the Palm is no real iPhone competitor, so Palm moves to where the ihone isn't. That is their best market position. But in direct competition with the iPhone thePre doesn't stand a chance. Apple knows this and has a bone to pick. Verizon knows it too and is happily using Palm as the only lure they have in their toolkit to give them ANY position of strength with Apple whatsoever.
  • Reply 20 of 106
    Maybe Verizon's plan is to eventually offer all smart phones. Would let them corner the subscriber market will a full selection.
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