It's been rumored for several weeks now that Palm was up for sale, with a number of different companies supposedly taking a look at it, but news has come through now that HP has picked it up for $1.2 billion. Palm's business has been running downhill for a few years now; its worldwide market share has fallen from 3.5 percent in 2005 to 1.5 percent in 2009 -- despite the relatively warm welcome its Pre device received. The Pre was the first Palm phone to run its latest operating system, WebOS, which was supposed to help the company compete in a revitalized and highly competitive marketplace against the likes of Android devices and the iPhone. But that hasn't yet happened. The Pre (and the following device, the Pixi) hasn't grabbed significant market share, which compounds Palm's other problem: lack of a strong developer community for WebOS. That is actually sort of ironic, given that an older incarnation of Palm was probably better than anybody in the mobile space at cultivating a huge and loyal developer community, back in the days of Palm OS. So if scale and a lack of developers are the two biggest problems holding Palm back, does the HP deal actually do anything to help solve them? Maybe that's looking at the situation the wrong way: perhaps the point of this isn't for HP to fix Palm, but for Palm to bring something more to the table for HP. Like 1,500 patents.

It appears that Wall Street is giving up on Palm after sales of the Pre have been massively disappointing, and Sprint (their only US partner) appears to be focusing more and more on HTC Android-powered phones these days. At the same time, developers are recognizing that if they're creating mobile apps, they need to decide which platforms to work on, and the markets for the iPhone and Android smartphones look a lot more exciting.

This is, in large part, due to poor planning on the part of Palm and Sprint. First, Palm was way too slow in really opening up its developer program. By the time it finally got around to it, more and more Android phones were hitting the market, with much more of a marketing push. Developers, given the choice, will go for the platform that actually has users. That's why I still say it was a huge mistake for Palm and Sprint not to have figured out a way to give away the Palm Pre for free. The thing that Pre needed more than anything else was market share. With market share it could attract developers and a loyal following. Without that, Palm is dead and everyone knows it. Having failed at that, and now thrown away its head start over the rush of Android-powered devices hitting the market, Palm is quickly looking like an afterthought, just months after the Pre was released.

I actually stopped by a Sprint store earlier this week, because I was interested in seeing its recent Android-powered phones in person. I played around with them, and then picked up the Palm Pre as well -- and I have to admit that the hardware on the Pre is really nice. It's just a much nicer overall package than the HTC Hero (an Android-powered phone) -- more compact, had a more solid feel, and the slide out keyboard is actually quite nice (if a bit small). But, after seeing all the developer support moving towards Android, I have no interest in betting on a dying OS. And that's when I wondered why Palm didn't just release an Android-powered Pre as well. I recognize that it's got a lot invested in webOS, but it's a sunk cost and a losing strategy.

A few years back, after years supporting its own Palm operating system, the company started offering Treo's that supported Windows Mobile. It's time to do that again, but for Android, letting the company actually make use of a much larger, committed developer community, rather than trying to keep the whole thing in-house.

We've been getting on Palm lately for the widespread mistakes the company made in building out a strong developer community. Despite having had strong developer communities in the past, with the Pre, it seemed like Palm decided to simply copy everything (even all the bad things!) that Apple did with the iPhone app store. It was a terrible case of iPhone cargo cultism, that seemed to assume that if they just copied the iPhone's every move with developers, things would be just like the iPhone. Now that that's backfired, it looks like the company has come to its senses. It's brought in some Mozilla developers and opened things up wide. It's done away with the fee for developers. It's openly allowing people to offer their apps directly to Palm users without having to go through an insane and arbitrary approval process. And, the new folks promise this is just the beginning of a much more open offering. It's about time. This is the sort of thing that Palm should have done before it launched.

In the meantime... there are still other problems showing up, including odd complaints about hidden limits on how many apps you can get through the Pre app store, without any clear response from Palm. So, for every step forward...?

A little over a month ago, I suggested that Sprint and Palm were making a big mistake in not offering the Palm Pre for free (more specifically, saying that Sprint should subsidize the full price). I don't think I can recall a post where more people told me I was so totally wrong. People insisted it was the dumbest idea ever, and that it would harm the brand value of the Pre, while costing Sprint way too much money. Yet, I still stand by that claim. Sprint doesn't make money selling the phone, it makes it by getting people to sign up for at least two years of Palm Pre service -- which is on the higher end of the service scale. The Pre is not as good as the iPhone, and did very little to really stand out from the competition. So the way to get around that is to offer the device for free.

At least some people seem to agree.

The device is now being offered in the UK... exactly as I suggested: free with a two year contract. At the same time, through some tricky step following, you can actually get the device for free in the US as well. I don't see how that takes away from the prestige of the device at all. If anything, it's only going to help make it easier for some people to at least try it out as a phone.

Of course, my other big complaint with the Palm Pre -- its weak developer support still stands. Famed developer Jamie Zawinski just wrote about his absolutely ridiculous experience trying to get two simple apps available on Palm Pre phones. It's taken months, and they're still not available, even though he wants to make them available for free. Instead, as with the iPhone, the "approval" process of getting apps into the app store are positively ridiculous. I had been seriously considering getting a Palm Pre (in fact, a few months ago, I was positive I was going to get one), but without real developer support, it's just not worth it. I'll wait until a decent Android phone is available instead.

We've mentioned in the past how silly it is that Apple blocks the Palm Pre and other devices from accessing iTunes. Plenty of people responded, pointing out that Apple really makes its money on the hardware, and thus it makes no sense to allow other hardware products to connect to iTunes. While I agree that Apple makes its money off the hardware, I still disagree that Apple should block others out. In doing so, it makes me and many others less likely to purchase an Apple product, because I don't want to get trapped into Apple hardware. I'd much rather a more open solution.

Over at Slate, Farhad Manjoo has written up a wonderful explanation of why Apple should not just allow the Palm Pre and others to connect to iTunes, but it should encourage it. The whole thing is worth reading, but here's a snippet:

I hope the company continues to search for ways to sync with iTunes, because the fight--silly as it seems--is important, and Palm is clearly in the right. Apple may have the USB-IF on its side, and it may also be protected by copyright law. But by blocking non-Apple devices from its music app, Apple is violating a more fundamental principle of computing--that unalike devices should be able to connect to one another freely. The principle underlies everything we take for granted in tech today: It's why the Internet, your home network, and the PC function at all. And it's why Palm should keep storming the iTunes fortress.

I am not claiming that Palm has the legal right to hack into Apple's software, nor am I calling on any authorities to compel Apple to let Palm in; if the cat-and-mouse game turns into a courtroom brawl, it's very likely that Apple would win the fight. Instead, I'm calling on Apple to stand down. Even better: It should create a legal pathway for Palm and every other company to sync with iTunes. Why? The most obvious reason is that it's good for iTunes users. Nobody other than Apple benefits from locked-down software. Apple frequently extols the wonders of digital music--the convenience, the flexibility, the environmental friendliness. But how flexible can it be if you're allowed to sync your tunes only with devices made by a single company?

What's more, the iTunes block is hypocritical. Like every other tech company, Apple has benefited enormously from the spirit of interconnectedness that pervades the tech industry. The iPod would have fizzled if Microsoft had blocked it from hooking up to Windows PCs. Or look at the iPhone--Apple is proud that it can sync with Outlook, Microsoft Exchange, Gmail, Yahoo, and just about everything else. Indeed, you could argue that Apple, once left for dead on the periphery of the tech industry, managed to come back only because it skillfully marketed Macs as the most promiscuous computers you could buy.

Indeed. While it's unlikely that Apple will actually do this, it would be a smart move. No one's buying Apple hardware because it syncs with iTunes. They're buying it for many other reasons, and Apple can continue to compete on those. Blocking the Pre and other devices from accessing iTunes is petty and unnecessary.

I recently explained why I thought Sprint made a rather large strategic marketing error in pricing the Palm Pre at the equivalent price of an iPhone: $199 (after annoying mail-in rebate that turns many buyers off). In fact, I argued why it would make a lot more sense to further subsidize the phone all the way to free, and make up the money on the backend with more subscriptions. Given how heavily invested Sprint was in the Pre, and how pathetic the sales have been to date, it really makes very little sense to keep the price so high. So, at the very least, I thought it was a good first step this morning when it was "announced" that Sprint was offering the Pre at $99. Of course, there were some silly things about this promotion as well. First, it only applied to new customers, transferring numbers over from other carriers. What better way to mock your loyal customers than to offer others a better deal? Second, they didn't just discount the phone, but gave you a "credit" that was split over the first three bills (better than a mail-in rebate, but still annoying). However, what was even stranger was that Sprint didn't even seem to understand the promotion itself. John Paczkowski noted that in some places on Sprint's website it said the promotion ran until October 10th. In others it said October 31st.

Apparently, the confusion at Sprint headquarters went well beyond that, because as the company attempted to sort out the confusion, it announced that it was doing away with the special promotion entirely. And yet, even after announcing it, the offer page remained on Sprint's site. It's not at all clear what happened here, other than Sprint seems somewhat clueless in how to do basic promotions, pricing and marketing. Obviously, the company intended to offer the phone for $99 -- it's on the company's own site. And yet, now it's suddenly claiming that it was a mistake? I can already see the business school case study on how not to launch an innovative smart phone.

There was plenty of hype around the launch of the Palm Pre, which by all accounts is a pretty damn good phone (I've played around with it, and like it). However, Palm and Sprint made two huge mistakes in marketing it. First, they didn't have a really well-developed developer community building apps for it, so the app store is pretty weak. Apple did this with the iPhone when it launched (and we dinged them at the time as well), but Apple got away with it for two reasons: Apple is leading the field in such smartphones, and it's Apple, who seems able to bring developers to the table with cultish enthusiasm and loyalty.

Palm doesn't quite have that.

If the problem was that the SDK wasn't ready, Sprint and Palm should have waited. Launching before the phone was really ready was a mistake, and the company may be paying for it with rather weak sales after an initial burst. However, one analyst has a suggestion that I think makes a lot of sense, saying that Sprint should drop the price of the Palm Pre to $0.99. Basically, let Sprint subsidize more of the phone -- which it would easily make back in service fees (since the phone requires a two year contract with its most expensive data plan). Pricing the phone at $199 makes it a direct comparison to the iPhone, and that's the last thing that Palm or Sprint should want. But dropping the price to $1 (or, hell, give the damn phone away for free with a two year plan), would get it a lot of attention, and give people a real reason to switch away from other carriers or other phones, and give the Pre a shot. Trying to compete with the iPhone by just saying "but we're better" doesn't work. Rather than spending tons of money on creepy TV commercials that make no sense, why not use that ad budget to subsidize the phone in a way that really builds up a lot of attention and serious buyers? If Sprint did that, I'd go sign up for a Palm Pre that very day.

I have to admit that I've never really understood Apple's ongoing efforts to block any sort of compatibility with both iPod devices and iTunes. You may recall a few years back the big fight between Apple and RealNetworks when Real tried to let its software connect to iPods, which Apple treated as a gross injustice. Now Palm is doing the opposite, by letting the Pre connect and sync with iTunes software by making the device pretend it's an iPod when connected to a computer. Apple, however, has responded with a neat little message that never actually mentions Palm, even if it's entirely transparent who it's about, warning people that Apple can easily break syncing when it updates its software. Of course, Apple did it in a way that it can claim wasn't meant nefariously at all. All the company really meant was to make people understand that it has no control over how the Pre syncs with iTunes, and it's possible that an update could break that syncing. Sure. Right. Except most people assume this means Apple intends to break it.

But I don't understand why. For people who bought the Palm Pre, that's only going to piss them off and drive them to use other software, taking them away from Apple's products. Why does that help Apple? Having Palm Pre syncing with iTunes increases the value of iTunes. What's wrong with that, other than being the latest example of Apple's dislike of anyone doing anything not invented in Cupertino?

The Palm Pre launches at Sprint this Saturday, and you've probably been seeing an increasing amount of buzz on the subject [that is a Google search link, and today will show buzz, but if you're reading this later, will be meaningless]. I wrote about the Pre on Techdirt after being very impressed with the phone at CES and MWC Barcelona. I wrote, "I'm not sure when the bandwagon is going to hit the trail for this device, but I'm saddling up right now." And in the intervening months, I've noted that more and more reviewers were, like me, heaping praise on the device. But there was something else: many reviewers couched the endorsement of the Pre with caveats. At the end of every glowing article was a conclusion that seemed out of sync with the review. Here were mine, "I can't predict whether the developer community will rally around the Pre, or whether Sprint and Palm will be successful in selling big volumes, but I want to call this one early: the Pre is a great smartphone." Walt Mossberg at the WSJ wraps up his glowing review with, "All in all, I believe the Pre is a smart, sophisticated product that will have particular appeal for those who want a physical keyboard. It is thoughtfully designed, works well and could give the iPhone and BlackBerry strong competition -- but only if it fixes its app store and can attract third-party developers."

The caveats were reasonable. Developers have limited resources, and collective uncertainty in Palm and Sprint performance has us hedging our bets. Sure, we could assert that the device is great, but we could not be sure if the ecosystem would grow around it. But I think I'm in a better position to do that now. When 98 out of every 100 reviews say the device is great, isn't that one hell of a consensus? I haven't seen that kind of agreement in this industry since AFTER the launch of the iPhone. That's exactly the kind of community consensus that seeds an ecosystem. I officially retract my hedge. What content developer wouldn't be at least attracted to a device that gains such consistently high grades? Is it just hype? No. A landslide of positive reviews from people who actually tested isn't hype - it's straight As. That's good news for Palm, good news for consumers in that we get another competitive device to run alongside the iPhone, but only marginally good news for Sprint. Verizon took the wind out of Sprint's sales [sic] by announcing they, too would carry the Pre by year end, and AT&T is rumored to want a GSM version.

The Palm Pre comes out in a few weeks, and many are hoping that this is finally the smartphone out there that can capably compare to the iPhone. Of course, one key to that is having a devoted developer community that makes the device more valuable. Palm is betting the business on the Pre, and some of the early reports I'd heard from developers about its WebOS platform were that it was a great development environment. Since I think it's good for the overall market to have strong competitors, I was hopeful that maybe the Pre would live up to the hype (to be honest, I'm thinking about getting one myself). However, slimcat, points us to the story of overly legalistic Palm overreacting to a minor issue and canceling a chance to work with the folks who were setting up PreDevCamp. Now, Palm had no obligation to work with the folks setting it up, but it would be a good way to support the developer community. So why did they bail out? Apparently because one of the folks behind PreDevCamp mentioned on Twitter that he was meeting with Palm, but that he couldn't say anything since the meeting was under NDA.

Now, if you've been around larger companies for any length of time, you can see why this happened. It's pretty standard that a meeting under NDA means that even the fact that the meeting exists is covered by the non-disclosure agreement. So... I can understand (at first glance) how Palm reacted. But, Palm really should have taken a step back and looked at the larger picture. Having the guy reveal the meeting was hardly a big issue. The bigger issue is helping developers feel as comfortable as possible developing for the Pre and making the device as valuable as possible. Freaking out over a harmless "leak" about the meeting is missing the big picture in a way that only hurts Palm. Update: Looks like things are getting worked out with Palm apologizing for overreacting and a nice airing of differences that seems to have worked well for both sides.