Palm taps China providers to push smart phone sales
Mobile device maker Palm is aiming for a breakthrough in China this year as it increases sales efforts through mainland service providers and distributors.
Palm, based in California's Silicon Valley, will make a US$25 million, six-month worldwide marketing campaign for its new generation of smart phones.
'The market for data-centric converged devices - or smart phones - is growing rapidly in China and the rest of the world,' said Paul Blinkhorn, vice-president for Asia-Pacific operations. 'In China, we launched the Treo 650 about a year ago through our general distributors as Palm's first foray in the smart phone market.'
He said the future for Palm's smart phone marketing would be increased use of service providers in each market. 'We are in dialogue with China Mobile and China Unicom,' he said.
Research firm International Data Corp forecasts that total volume shipments of data-centric converged devices in the mainland, Hong Kong and Taiwan will reach 4.77 million units this year, up 188 per cent from 1.66 million last year.
IDC expects the total market value of these devices in Greater China to jump 162 per cent to US$2.27 billion this year from US$868 million last year.
Palm last month in Hong Kong launched its first Microsoft Windows-powered third-generation cellular smart phone, the Treo 750v, exclusively for SmarTone-Vodafone. Mr Blinkhorn said the Treo 750v allowed Palm to target the large untapped market of business e-mail boxes with mobile push e-mail platforms.
According to market research firm Radicati Group, only an estimated 3 per cent of business e-mail boxes worldwide are accessed via mobile phone today.
Although low-cost personal digital assistants (PDA) remain a significant part of its business, Palm has sold more than three million smart phones, which will make up a larger percentage of its revenue, Mr Blinkhorn said.
For the 12 months to June last year, Palm revenue surged 24 per cent year on year to US$1.6 billion.
Research firm Gartner said Palm continued to recede from the PDA device market because it lacks a model with cellular capabilities.
In the third quarter last year, Palm PDA shipments totalled 465,525 units for a 10.3 per cent worldwide market share, Gartner said. By comparison, market leader Research In Motion, the Canadian maker of the BlackBerry, shipped 949,334 units to seize a leading 20.9 per cent share.
Palm posted revenue of US$392.9 million in the quarter to November 30, down from US$444.6 million a year earlier.
Its smart phone sales for the period totalled a record 617,000 units, up 42 per cent year on year and 8 per cent sequentially.
'More customers throughout the world bought Treo smart phones than ever before,' said Ed Colligan, Palm president and chief executive. 'In addition, we accomplished a number of strategic objectives during the quarter, shipping two new Treo models to expand geographically and demographically, securing perpetual rights to the Palm OS source code and diversifying our manufacturing partners to strengthen our cost position and our product pipeline.'
Palm last month unveiled in Hong Kong its latest smart phone - the Treo 680. It started manufacturing the Treo 680 smart phone last year through an undisclosed China-based contractor, enabling Palm to deliver that product to more regions faster. Palm plans to offer the Treo 680 on 20 carrier networks around the globe by the end of the second quarter this year.
However, a report last month from New York financial services firm Oppenheimer noted the stiff competition in store for Palm in the smart phone market dominated by Nokia, Sony Ericsson, Motorola and Samsung Electronics.
'We are becoming increasingly concerned about the prospects of [growing] competition in the smart phone market and the impact of declining pricing on Palm's profitability,' said Oppenheimer analyst Lawrence Harris.
With interactive marketing agency AKQA as partner, Palm has embarked on a mix of print, online and mobile marketing to promote its smart phones worldwide.
Palm believes accessing the web while on the go is the next killer application, according to Scott Hancock, director of marketing communications at Palm.
The popularity of web services, such as eBay, in combination with a Treo smart phone means for example, eBay fans can look for products they want and monitor auctions of interest while away from their desktop or laptop computers.
The new campaign is expected to help people who are not necessarily early adopters see how their personal and professional lives can be enriched with a smart phone.
