The company had many challenges ahead of it as BlackBerry hit the big time, securing not only the enterprise and SMB markets but also achieving success in the consumer space with the Curve and Pearl models, and Apple who released the iPhone in 2007 which spelled doom for last generation touch devices like the Treo.

In January 2009, Palm announced its answer to the competition and placed its future in the hands of its new webOS software. Early adopters and investors seemed impressed but unfortunately it failed. Palm was acquired by HP (HPQ) on April 28th, 2010. The failure is three fold: business and marketing, software, and lastly hardware. In this post, I’ll cover the business aspects of the situation.

Palm chose Sprint Nextel as their launch partner of the device in 2009. The exclusive launch partner. It made sense, somewhat. Sprint was still hemorrhaging customers because of its divided attention after the Nextel acquisition, lackluster customer service, and deficit of focus. Palm expected that it could divide marketing costs with Sprint, receive more prominent placement in stores and have the Palm Pre, the first webOS device, serve as the flagship device for Sprint’s rebranding campaign. Having announced the device five months before it would actually ship, the hype machine was in full force and many were hopeful for its resurgence. Palm was trading at $1.42 as of December 8th, 2008 on the NASDAQ and by the launch of the device, it was at $13.01 in early June.

The single carrier exclusivity strategy was ill-fated. It limited the audience of the Pre to just too few consumers. In the quarter leading up to the release of the device, Sprint reported that it had lost 1,250,000 postpaid customers, 531,000 from the Sprint CDMA side of the business. That meant that at launch time, Palm had an possible embedded sales base of just 25.3 million customers, because remember, even though Sprint had 49.3 million subscribers, only a little over half are on post-paid CDMA contracts. Sprint led the industry in the worst way possible with 2.25% postpaid subscriber churn. Sprint bet, and most likely made concessions for the exclusivity, to draw in and keep high-ARPU smartphone users who would want the Palm Pre.

Yet Palm, even riding the wave of pre-CES hype in 2009, didn’t have a magical and lust-worthy device like the iPhone which would lead to customers ditching their old wireless providers in droves. Apple didn’t have that problem; even though they were new to the phone business, they picked a huge carrier and had a built in audience that would pay an early termination fee just because Steve Jobs blinked in their general direction. Palm had no such luxury, and they blew it. It wasn’t until the following CES in January 2010 when Palm announced the device would land on its second US carrier, Verizon Wireless, which would prove to be too little too late as the momentum in the smartphone space had shifted to Android and BlackBerry for other carriers and to iPhone for AT&T.

Much of this analysis deals purely with the business aspects of the failure of a reinvented Palm, but a significant part of the dismal sales numbers had to do with the marketing of the launch device, the Pre. The ads were, to put it succinctly, creepy and perplexing.

This ad did little to show what the phone was capable of and instead gives us an alarmingly creepy woman that seems to be fond of prolonged pauses during her allegory about how jugglers can juggle many objects with ease. This wasn’t just one poorly focus-group tested ad, it was one in a series of about seven ads featuring the same themes. It took Palm until early March 2010 to produce a strong ad which displayed in an easy to internalize way just what the new operating system could do and its particular strengths like unobtrusive notifications and aggregation of personal information across cloud services.

And here’s the kicker, Palm had a case study in great and effective advertising for a phone from their chief competitor: Apple. If there is one thing that Apple had proven is that the can market anything and do it well. Their ads for the iPhone, for each successive iteration of the device, have shown exactly what it can do, how simple it is to operate, and who makes it. Even if you hate Apple, you couldn’t fault them for not communicating the what, why and how of their product.

As a quick aside: look at BlackBerry, another company which is struggling in the branding and advertising space. Back when it was chiefly a business brand, they didn’t have to do much advertising outside of print and online ads targeted at their core audience, IT managers, C-level executives and those who aspired to be them. Now, with their half-decade long foray into consumer devices achieving moderate success, they decided they needed to position themselves as a lifestyle brand. With the marketing tagline “BlackBerry: Love What You Do“, Research In Motion jumped the shark and almost made it to the moon. The 30-second spots featured break dancers, a punk band, and a poor cover of a beloved Beatles track as a means of selling an push email device that was still two generations behind Apple in terms of usable software.

Coming up next this week, how Palm failed with software and hardware and what the HP acquisition means.

This morning, I was looking for a Quicksilver-inspired Windows application to use in my coming experiment (details to come soon – I have to check with Amnesty International to verify whether or not it falls in the realm of torture), and I found a new one that tries in their own special way to do the same. Dash is one that really caught my attention as it seems to best capture the basic nature of Quicksilver’s search, but it led me to another facet of the Windows developer problem which is how they market their software. Take a look at the seven reasons they suggest I use Dash at their product page. Item two on that list (because everyone loves reading lists) is “Reduce Repetitive Stress Injury”. Seriously, go look, I’ll wait… Rather than the pithy “act without doing” tagline adopted by Alcor, the developer of Quicksilver, Dash takes it in the opposite direction and is positioning this as a marvel of modern medicine. I say this in jest, but the problem is that it’s not addressing a problem they can solve or the strength of their product – it strikes me as something they pulled out of their butt to fill the empty space on the site.

And then there’s price. Dash is set at $50.00 except if you purchase now, you can get their “pre-release offering price” of $19.95 saving you $30.05. Let’s skip right past how this is on par with infomercial level “buy in the next thirty minutes and get a second free!” silliness and look at how it’s they’re establishing value. Software isn’t designed to be inexpensive and offering excessive discounts can make it seem as though you’re diminishing the worth of a product; a great example of this is Transmit from Panic Software for the Mac – it’s an FTP client, but it’s billed as the FTP client. As such, Panic doesn’t discount the software to entice those who undervalue what they offer, which is a fantastic user experience and just well-designed software. Cyberduck and Fugu are free, but I saw the value in the product that made $29 palatable. What the makers of Dash are doing is, in my opinion, either mispricing their product or using used car salesman tactics to win over customers. Ignoring the fact that Quicksilver, a vastly superior product to this knock-off, is completely free – Dash is selling an application at their ‘regular price’ that pushes it into the range of what full-fledged productivity apps cost. Launchbar, a product similar to Quicksilver for Mac is priced without the gimmicks, at $19. Fair.

I could continue, but for the sake of brevity, I’ll end this here. Windows developers and software vendors have so much to learn from the Mac developer community about creating better applications, but even more importantly, about marketing. If it can be summed up in a sentence or two, it would be this – stop selling simple consumer apps the same way Microsoft and Oracle sell enterprise CRM software. Home users don’t want to see how many different ways you can say the same thing on your “features” page, they want to see you solve a problem they have and do it elegantly.