The latest version of Palm’s webOS is out, but a reduction in orders to suppliers had investors worried Wednesday. The release of webOS 1.3.5 for Sprint Nextel’s Palm Pre and Pixi customers isn’t expected to ease Palm’s financial woes, but makes it easier for users to download applications from the App Catalog.
Palm has had 10 consecutive quarterly losses, and its new webOS faces significant competition. Palm investors worry that webOS may not be the preferred platform for Palm’s wireless-carrier partners or end users. And Palm’s recent cuts in orders to suppliers left investors feeling shaky.
While Palm expects webOS to lead its product road map and services and be a key differentiator, it’s a new OS and the company doesn’t yet have the experience to determine its commercial viability. “We also have not had the advantage of working with and refining the OS over a long period of time, especially under commercial conditions,” Palm said in its Dec. 23 quarterly report.
New Carriers?
Palm and its investors are dependent on Palm’s Pre and Pixi smartphones to take it to the next level, since revenues from Palm’s legacy products are declining. Currently the smartphones are sold exclusively through Sprint, but analysts expect Palm to announce a relationship with Verizon Wireless and possibly AT&T at the Consumer Electronics Show in January. Some are even predicting Palm will announce a new smartphone.
Investors are also worried about significant competition from other mobile operating systems, including Apple’s iPhone, Nokia’s Symbian, Research In Motion’s BlackBerry, and Linux-based operating systems, including Google’s Android.
“If Palm webOS or the operating systems that we license in our current or future products do not continue to be competitive, our revenues, results of operations, and operating cash flows could be adversely affected,” the company reported. “If our Palm webOS service offerings do not scale…
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