Palm releases Foleo while staving off acquisition

Palm has rolled out the Foleo, to limited praise, but this week also managed to dodge acquisition.

Palm has made key moves in the past couple of weeks, releasing a new complement to its Treo smartphones while also avoiding acquisition by giving up a 25% stake to a private equity firm.

First among the key announcements was Palm's introduction of the Foleo, a laptop-style clamshell device that connects to a Treo via Bluetooth for one-button email syncing. The Foleo, according to Palm, offers email junkies a bigger form factor to view messages and edit documents. It features a 10.2-inch screen, full keyboard, instant turn-on and about five hours of battery life.

But many mobility experts say the Foleo is destined to flop, with Jack Gold, principal and founder of J.Gold Associates, a Northborough, Mass.-based mobility and wireless research firm, dubbing it the "Palm Folly-O."

"The whole point of having BlackBerrys, Treos and the like is to have something small," Gold said, noting that the Foleo means extra gear to lug around simply for mobile email, essentially defeating the purpose of carrying a smaller form factor smartphone.

The Foleo is priced at about $600, or $500 after a $100 rebate, which many mobility experts say is too pricey, especially when a traditional laptop can be purchased for a similar or slightly higher amount. Gold said that the Foleo, as a standalone, can surf the Web through an Opera Browser over a Wi-Fi connection; it uses Documents to Go to let users edit attachments received on Treo, and it has a PDF viewer and a VGA output for presentations. It runs Linux, offers 256 MB of memory with no hard drive, and has an SD and CF slot along with a USB port for additional flash memory, though it is still unclear whether that port can be used for a USB hard drive.

Billed as a companion device for Treos, the Foleo syncs with only Versamail and Pocket Outlook, instead of using Good Mobile Messaging, which drove many users to a Treo in the first place, Gold said.

Weighing in at two pounds, the Foleo may be too large and heavy for users accustomed to carrying a smartphone, especially as a peripheral device.

"Many users got a Treo or a BlackBerry in the first place to not have to carry around something that big," Gold said. "Will users be willing to carry around a peripheral that is four to five times the size and weight of their smartphone device?"

Todd Kort, principal analyst with Gartner Inc., didn't mince words. "The Foleo is a dud and will soon be forgotten," he said, adding that Palm's secrecy surrounding the Foleo and the hype it generated make it notable, but most of that hype was created out of expectations for a new hardware product.

But the Foleo, flop or not, may be the last such folly Palm pulls out of its hat, especially since the company announced this week that private equity firm Elevation Partners has acquired a 25% share of Palm. Three of Elevation Partners' members, one of whom had a strong hand in Apple's iPod success, will take roles in guiding Palm's future.

Kort said the new lineup could "help Palm break out of the catatonic spell that has engulfed their hardware engineering team. They replace some dead wood on Palm's board of directors with some people with fresh ideas and a strong track record of achievement. Their timing is impeccable, following shortly after the disappointing news of the Foleo last week."

Daniel Taylor, managing director for the Mobile Enterprise Alliance, said, however, that one of the reasons the Foleo appears to be a flop is the way Palm is positioning it. He said Foleo has potential to be a home run, but Palm's marketing has made that quite unclear.

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"When it takes a week for Palm loyalists to figure out what this thing is and why they should buy one, then that's a problem," Taylor said.

He added that Palm would have benefited from positioning the Foleo as a complement to all smartphones, supporting Treo, BlackBerry and others.

"Sell a Foleo to every smartphone user on the market who wants a small, ultra-portable laptop," he said. "That's the point of the synchronisation with the smartphone. Foleo is designed to replace the laptop for this exclusive group of mobile workers."

Taylor added that the Foleo doesn't need a smartphone to work and said it can be paired with a Wi-Fi network or a 3G mobile phone. Also, he said, the price point doesn't seem too high considering that it offers benefits that everyone -- from mobile workers to consumers -- wants.

"If we take the smartphone out of the equation, because that's just one market for Foleo, we have other connectivity options that include Wi-Fi and Bluetooth paired with a modem on a 3G mobile phone," Taylor said. "We can just as easily use that 3G connection. This is a boon for IT departments that are challenged to manage product lifecycles, architectures, services and technologies that include 3G services."

Rather than having a 3G radio on board, which is a common and costly addition to laptops, the Foleo uses a mobile phone's radio, making it a simple solution for use of a single device platform for global deployments.

"From an enterprise standpoint, this makes Foleo instantly deployable on a global basis," Taylor said.

For users, he said, Foleo becomes a useful suite of applications including email, Web browser and the ability to view, manipulate and save documents while also avoiding the bloat of a personal computer.

Gold, while adamant that Palm should have focused its time and money on creating a new Treo, said the Foleo will still find a few users in the woodwork.

"While we believe some of these devices will sell as niche products, or to the diehard Palm aficionados, we don't believe Palm has come up with a product with large enough appeal to make it a big seller, and certainly not to the level of pre-announcement hype from Palm regarding this device," Gold wrote in a recent report. "We don't believe they did their homework on this one. Palm would've been better off investing its resources in an upgrade of the venerable Treo to make it more competitive with the newer generation smartphones from Nokia, RIM, Motorola, Apple, etc."

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