Palm and Microsoft on defensive against Apple

by Caroline Gabriel, ReThink Wireless

Palm and Microsoft were both going on the defensive this week, defending platforms that are under increasing pressure from Apple and other challengers.

In an SEC filing, Palm backed away hastily from comments made by Roger McNamee, a partner in its largest investor Elevation Partners, in which he suggested to financial newswire Bloomberg that the upcoming Palm Pre would quickly usurp the iPhone’s crown.

“You know the beautiful thing: June 29 2009 is the two year anniversary of the first shipment of the iPhone. Not one of those people will still be using an iPhone a month later,” McNamee said. Palm was clearly sufficiently unnerved by this over-optimism, and possible backlash from shareholders, if the comments were interpreted as a sales prediction, to distance itself in official filings. The timing of McNamee’s comments was particularly sensitive since Palm was about to launch its stock offering to raise money to help finance the launch of Pre, expected to take place around midyear with Sprint Nextel and possibly Vodafone.

In its document, Palm clarified or withdrew 10 references made during McNamee’s interview. It called the forecast of iPhone defections “an exaggerated prediction of consumer behavior pattern” and withdrew statements about the ageing technology underpinning RIM BlackBerry and iPhone. It also said: “With respect to the implications in the second to last and last paragraphs of the article that Palm’s new operating system will give it an edge over competitors that ‘are going to run out of gas way before’ Palm, estimations of the relative useful lifespan of smartphone operating systems are conjecture, unverifiable at this time, and age is not necessarily predictive of their relative long term success.”

Palm is to boost its dwindling cash pot by remarketing $49 million in shares that Elevation Partners had purchased. Elevation, which ploughed $100 million into Palm only in December, will recoup the $49 million and will use those funds to purchase shares of Palm’s common stock at the public offering price.

Meanwhile, Microsoft CEO Steve Ballmer was also on the back foot in the face of Apple, as he came under fire from Windows Mobile customers at the Microsoft Public Sector CIO Summit this week. According to TechFlash, he faced questions such as this one from Chris Kemp, CIO of NASA’s Ames Research Center. “With platforms like the Google phone and iPhone coming out, it’s really tough to continue to stand behind Windows Mobile when our employees are bringing these consumer devices into our environments. I’m wondering what your commitment is to continuing to get newer versions of the operating system in our hands so that we don’t have to fight this battle on the ground,” Kemp said.

Ballmer promised his company would redouble its efforts to bring Windows Mobile 7 to market. “There are opportunities for us to accelerate our execution in this area,” he said. “We did sell more Windows Mobile devices last year than Apple did iPhones – just an important factoid to have. BlackBerry was a little bit ahead, and Google was nowhere to be seen, except in Silicon Valley, I’m sure.”

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