Palm seeks to build sales off strong platform

Jon Rubinstein, chairman and chief executive of Palm, discusses games for the smartphone in Las Vegas last week

Living in the shadow of the world’s most powerful technology companies in one of the hottest new consumer markets, it’s not surprising that Jon Rubinstein bristles when the name of his former employer comes up.

The chief executive officer of Palm, Mr Rubinstein is a former top lieutenant of Apple chief executive Steve Jobs, and has been following the Apple playbook closely with his company’s own touch-screen smartphones.

Speaking in an interview at last week’s Consumer Electronics Show in Las Vegas, however, he tried to shrug off comparison between the two technology companies.

“I don’t see us as following Apple at all, we have our own DNA,” he says. And he is dismissive of Google, which has created plenty of buzz in recent months with new handsets carrying its Android mobile software. The latest buzz was last week’s unveiling of the Nexus One phone made by HTC, which now has the advantage of being promoted on Google’s homepage in the US.

“Our target is not the real techies – our target is consumers,” he says, in a line that is starting to sound practised.

For Mr Rubinstein, 2010 is the year he has to prove he can play on the same field as these groups – not to mention others such as Research in Motion and Nokia.

He estimates that there is room for between three and five different software platforms in the smartphone market. With six or more vying for a place, competition is getting fierce.

And while the WebOS software that Mr Rubinstein developed since moving to Palm in 2007 – and which is now the basis for its Pre and Pixi handsets – has been well received, Palm has yet to prove it can rebuild its business around the technology.

While its position in the US, its traditional home market, is stronger, its share of global smartphone sales, a business it once helped to create, is now estimated at less than 2 per cent.

“We’ve done exactly what we said we’d do,” insists Mr Rubinstein, who was brought in to help lead what he calls a “business restart” of the struggling Palm and was made chief executive last year. “None of these products happen overnight. You have to lay your foundation. These things become very viral, we haven’t reached the tipping point yet.”

Mr Rubinstein does not rule out one possible way to widen the reach for Palm’s technology: by licensing its WebOS software to other groups.

“We’re not religious about it,” he says. “If it was the right partner we’d consider it – but we wouldn’t go out and look for it.” Asked if Palm has had licensing talks, he hesitates before saying nothing is being discussed.

But, echoing the philosophy followed by Apple, he adds that he still believes strongly that the way to create the most value in smartphones is by closely integrating hardware and software and keeping full control of the user experience.

Mr Rubinstein is an engineer with infectious enthusiasm who has the gift of making short-term problems, such as a wilting market share, seem almost irrelevant. But he now needs to prove he is more than just the consummate engineer.

Brought in as head of hardware engineering when Mr Jobs returned to Apple in 1997, Mr Rubinstein had a hand in important products such as the iMac, and is credited with steering the development of the iPod.

Like Mr Jobs himself, he now needs to show he has the marketing flair and business acumen to turn Palm’s recent technology advances into a big business.

Last week’s announcement that Verizon Wireless would sell updated versions of the Pre and Pixi in the US was one of the breakthrough moments Palm’s investors – which include Elevation Partners, a Silicon Valley private equity group that has bet nearly $500m on a revival – have been waiting for.

Restricted by exclusive deals with Sprint in the US and Telefónica in some countries in Europe, Palm has been able to reach only a limited market, leaving it with only lukewarm sales of its new WebOS handsets in the first six months.

If Palm is to prove this year that it can break out of its slump, Mr Rubinstein will have to turn deals such as this into solid market share gains. “It’s about the execution: we’ve got the product, we’ve got the distribution,” he says.