Perception is Reality. Why Palm OS software sales have plummeted in 2008

Palm OS software sales are dead. Most developers will tell you that at the end of 2007 their sales dropped below sustainable levels, even below levels where support is justified. Some developers responded by offering existing titles for free with no support, others have closed completely, while many are looking to port quickly to newer platforms with greater potential. However, according to the buzz online, Palm OS has been slowly dying for three or more years now. And Centro sales have hit one million. So why the sudden sharp drop in sales? Is it because Palm Gear suddenly shut its doors, giving the false impression that Palm is through? Maybe Centro users, new to Palm, are too cheap to add software? Or Palm hasn't informed them of its benefit or existence? It could be the uncertainty of the new OS (Nova)? Or maybe it's just because news has been quiet? Any publicity is good publicity. This post explores some of the possible reasons, and a poll follows, to better understand the perception of why sales have tanked.

Palm “Nova” Effect
Will there be a Palm OS II (Nova) released? If so, when? Will Garnet (current Palm OS) apps work with the new Nova? Will Nova be vaporware, destined to the fate of the Foleo I hardware? Why is there no press about the progress? Palm is not hyping the upcoming new OS whatsoever. Is that because it's having trouble with its release? Has there been carrier resistance? Or is Palm gun-shy after all the Foleo hype and having to eat its words (and costs)? The only press this new OS has seen is that its release was delayed until 2009—and that notice went out in 2007! We also do not know if Nova will work with current apps, so why would anyone buy software if Garnet will be obsolete? The Foleo non-launch also caused a lot of doubt in anything forthcoming from Palm, as well as a previous non-launch of the Cobalt OS. Unfortunately, for Palm OS software developers, the delay in any news, especially good news, has taken its toll financially, so many are forced to finally abandon a mobile operating system that they have enjoyed in the past. Nova's perception of viability and lack of information has greatly affected current software sales and the desire to continue development.

Palm Gear to Pocket Gear
In November, Motricity, parent company to ESD's Palm Gear and Pocket Gear, decided to combine the two sites, much like its competition, Handango and Mobihand, who sell all OS' software on one site. Unfortunately, since much of the strength of Palm Gear was in the brand, closing Palm Gear gave the unexpected perception that “Palm software is no longer viable.” In addition, Motricity severely botched up the migration. Most customers couldn't find or even purchase software for nearly a month, and during one of the hotter times to buy software—the holiday season. Recent layoffs at Motricity and putting its ESD properties up for sale may be an indicator of how overall sales for Motricity dropped. Many in the mobile community still do not understand why they couldn't run an identical site under two brands—any CSS web developer worth their salt could have pulled this off. Closing Palm Gear gave a negative perception for Palm's future to customers.

Where Are the Centro Users?
Palm released the first new piece of hardware in a long time when they released the Centro in late 2007. In many cases, when new devices are released (even iterations of the Treo), software sales jump. People buy software to outfit their new gadgets; software sales are good when Palm releases hardware. This time, however, was different. Some developers saw a short spike in sales, but most did not. Usually adding new users to a market expands the market, benefiting everyone. So what happened? Are Centro owners uneducated on the availability of software? Are the carriers scaring them away with warning messages when trying to add software? Or are the customers who buy a $99 priced smartphone too cheap to spend additional money to add software? Centro's success should have caused increased software sales, but in reality it has not.

iPhone Insanity, Android Anticipation
Apple finally announced their iPhone SDK for third party applications late last year and Google offered a $10 million competition for applications written for its new Android operating system. In contrast, Palm announced a new “Designed for Palm Products” designation where developers could pay an outside certification test house a sum for each device and each application. Certification would gain the developer added marketing benefits, such as being featured in a kiosk in Palm's lobby or extra promotion in their Software Connection store. Many PDA and smartphone users indicated that the only thing that stopped them from moving to a new platform, such as iPhone, was the ability to add third party applications, which will soon be a reality. Google has yet to have hardware released with Android, but the 50 Top Apps in the first round of competition were announced this week and look promising. These factors put current users on the fence, essentially halting software commerce. All are waiting to see what these two new competitors will bring to the smartphone space. Why buy software on a potentially obsolete platform when these two new players could provide a fresh and exciting experience? The effect of the new competition on Palm OS software sales is very real.

Other factors
Some other traditional factors could be that the software market is saturated. Long time Palm OS users may have all the software they need, or that will run on the antiquated OS. New Centro users, as previously discussed, may not be adding any software. Developers may have sold to all the users who will buy. In addition, the Palm OS makes it easy to write freeware, so rather than spend money in this uncertain time for Palm, users may be only adding freeware in interim. These factors may be less of an effect, but cannot be ruled out.

Unfortunately, factors are numerous for the sharp decline in software sales. No one factor is the sole contributor. Most likely reasons are most, if not all, of the ones noted. As much as we love Palm OS, things do not bode well for its survival. Is it too late or can Palm dig us out of this hole? Will positive PR and letting the base know what's in the works do the trick? Or has that opportunity passed? In the meantime, long time developers and customers collectively must wait and see, or cut a path in a new direction.

Please vote your opinion in the poll and feel free to leave your comments.

Comments

Palm OS Sales

Based on what I have read, it seems there are probably more Palm OS devices in use today than ever before, so it does seem ironic that the sales of Palm software are so low now.

My own feeling is that this is primarily due to two reasons:

1. The main one is that the phone companies don't encourage users to install such software, or even actively discourage them from doing so. When most Palm devices were handhelds, Palm had a real business interest in pushing 3rd party aps - it made the device they were selling more attractive and useful. But the phone companies are only interested in the Phone itself; they want users to spend time on it, and gain just about nothing if a user buy some external software -- except, they think, the possible headache of a support problem if the software causes a problem with the phone.

2. When Palm OS devices were primarily handhelds, the buyers understood they were buying a computer, and it's normal to go out and buy software to make your computer more useful, regardless of the type of computer it is. Now, buyers understand they are buying a phone, and apparently don't expect to add software to it.

In addition, I agree that the $99 price point of the Centro may indicate that those who have purchased it, unlike those who purchased one of the more expensive Treo models, will not be that willing to invest in software to enhance the phone. I also agree that the demise of PalmGear probably added to the perception (whether valid or not) that Palm OS software is something of the past.

Having said that, the fact that there are 1mm new devices out there running the Palm OS cannot be a bad thing for those of us who sell Palm software. The question is, how do we get to those users?

One thing that I think may help: When iPhone users start being able to load software on their phones, the Centro users may finally realize, hey, I can do that too! and start shopping. I've always felt that the iPhone helped, rather than hurt, Centro sales - the Centro offered a much cheaper alternative for people who saw the iPhone but couldn't afford it. We'll see if iPhone software also helps Centro software sales.

Another factor to consider...

Early Palm OS phones did not included bundled software! Also other phones include few to none software.

The Centro comes with Documents to Go, Ptunes, IM client, Mail client, Web Browser. Also it comes with free sudoku and Solitarie. And lets not forget about Google maps.

With all this bundled software many people don't have a need for aditional third party programs.

What wee need is for third party software makers to push more new ideas and promote their programs more on the Palm OS.

Developers can embrace the centro but work is needed

Developers can take advantage of the huge centro sales but an effort is needed in terms of advertising.

The Centro is selling like hotcakes, specially to people that did not consider a smartphone before due to its price and size.

But since many people that buy the Centro are new to smart phones they don't even know it is possible to install third party programs on it. Worst yet many of the people who buy phones in general (be it WM BB, POS or "dumb" phones) don't even know or care what OS their phone is using and the only programs they install are games.

One way developers could take advantage of the huge Centro sales is to concentrate their efforts on new games for it! But as someone mentioned earlier there must be more advertising.

Palm os programing is relatively easy and most users of the Centro will be blown away by the possibilities of Palm OS games in high resolution. They are used to low resolution crappy midlets on regular phones.

Responses...

Thanks for your comments--I appreciate you taking the time to post them. Here's some thoughts:

RE: "Palm OS Sales"--I agree that the carrier's role, or at least the difficulty in reaching customers directly, has had an impact in sales. Now the third party developer must go through palm-->carrier-->customer before any communication with the customer is possible.

RE: Another factor to consider...--Bundled software may have had an impact, and could have been leading to the slow decline in software sales, but something significant happened at the end of 2007 to send sales into a tailspin.

RE: Developers can embrace the centro but work is needed--Do you have any ideas on how to advertise to/reach Centro customers? All the traditional means of advertising that third party developers can employ are no longer working. Where do these Centro customers lurk? Many third party developers are smaller houses, so cannot afford mainstream advertising, such as TV ads. Software seems to be an annoyance to carriers, and not a good income stream for them, and Palm has not stepped up in terms of promoting the concept of Centro software. Carriers and Palm also seem to want a piece of the software pie when they do get involved. It seems to be a no-win situation for the smaller dev these days.

One reason the Apple iPhone platform is so attractive to developers is that Apple will actively be promoting adding software to the device. The carriers do not get involved and the cut from Apple is minimal, as compared to other distribution methods for mobile software available today. Plus Apple will be making it easy for mainstream (i.e. not gadget enthusiasts) users to download and install the software--hopefully making it a pleasurable experience which can only spawn more software sales.

I Couldn't Agree More

That "the Apple iPhone platform is so attractive to developers is that Apple will actively be promoting adding software to the device ... the cut from Apple is minimal ... Apple will be making it easy for mainstream users to download and install the software". This is exactly what's been missing from both Palm and Microsoft. Third-party developers have been consistently ignored by Palm and Microsoft for so long, it's impossible to generate any enthusiasm for developing or selling software there. The iPhone and Android sponsors are showing much more commitment to the platform, and bring some badly-needed energy to the market.

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