Palm to boost marketing, app program to grow sales

Palm plans to officially open the doors to its WebOS developer program in early January and has started stepping up marketing in an effort to boost continued lagging sales.

For its quarter ending Nov. 30, Palm posted a net loss of US$81.9 million. Thats better than last years loss during the same period of $506.2 million. However, revenue slid to $78.1 million, compared with $191.6 million last year.

On a non-GAAP (generally accepted accounting principles) basis, the loss was $0.37 per share, while analysts polled by Thomson Reuters were hoping for a loss of $0.32 per share. Because Palm may update the software on devices it sells, it defers some revenue. The non-GAAP numbers exclude the impact of the deferred accounting method. Palm's GAAP loss was $0.54 per share, an improvement from a loss of $4.64 per share a year earlier.

The revenue drop was due to the continued decline in sales of legacy products, as well as the fact that the Pixi handset was introduced near the end of the period, said Doug Jeffries, CFO of Palm. Palm now has two products in the market based on its WebOS software: the higher end Pre and the Pixi.

Still, the company hopes it can meet its target of becoming profitable this year. It outlined several strategies for reaching that goal, starting with ramping up marketing efforts.

Were investing heavily in marketing to drive better awareness of our products, said Jon Rubinstein, chairman and CEO of Palm. We need to work very hard to get the word out and get people to understand why our products are better than the competition.

In addition, he expects to soon have far more applications available in the WebOS app store to attract users. Currently only a small group of developers has been allowed to contribute to the store, which has more than 800 apps.

But at the Consumer Electronics Show in January, Palm plans to open up its developer program to anyone. The WebOS SDK (software development kit) has been downloaded tens of thousands of times, leading Palm to expect substantial growth once the store is open, Rubinstein said. After we open the door to all who are interested, we expect to have thousands in short order, he said.

He also said that at CES, Palm will demonstrate a feature of the developer program that gives each application a unique URL that developers can use to market their applications online. The apps will also be added to a publicly available database so customers can read reviews and information about the apps online. Users will also be able to select the application using the computer but have it sent over the air to the Palm device, he said.

Rubinstein also announced Project Ares, a set of mobile development tools accessible from a browser. You can just log in and start building, he said. Developers will be able to access user interface widgets, use tools and upload applications from the browser-based service, which is now in beta.

Also at CES, Palm expects to begin offering the latest update to the WebOS software. The update will let users download and store more applications and will enhance Wi-Fi performance, improve the battery life and improve the Pixis speed and responsiveness, Rubinstein said.

His comments during the earnings call put an upbeat spin on Palms prospects, describing the current time as a period of ramping up for future growth. This is the beginning of a long race, he said. The company is now focused on ramping up deals with operators in order to sell the phones to more customers in more countries, he said.

But some onlookers have grown increasingly pessimistic about Palms potential for success. David Eller, an analyst at TownHall Research, thinks that Palm doesnt have great chances for survival, mainly because he said product sales have been slow.

A study released on Thursday by ComScore shows that sales arent likely to grow much any time soon. ComScore asked 2,300 people which smartphone they intended to buy over the next three months. BlackBerry is on top of the list, followed by the iPhone and Android phones. Just 2 percent of respondents said they planned to buy the Palm Pre.

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