Finance Matters

Archive for April 23rd, 2010

Palm CEO Jon Rubinstein is considering licensing his WebOS platform to other hardware makers, he tells the FT. This after his turnaround effort has stalled and Palm’s best hope appears to be an acquisition — if it can find a buyer.

But it’s hard to see how licensing will be a success for Rubinstein and Palm.

The biggest problem is that Google Android is running away as the non-Apple mobile platform leader, and we don’t know any reasons why a company would prefer to pay Palm to rent WebOS instead of just using Android, which is free and open-source.

Unlike WebOS, Android is beginning to receive significant consumer and developer traction. It has far more apps, developers, and hardware partners than Palm’s platform. And if a hardware company’s goal is to use a platform with mainstream adoption and a lot of apps, it seems that Android would be the more logical choice than WebOS.

Bigger picture, the mobile and apps industries are becoming a waltz of elephants, and there won’t be more than a few platform winners. It’s clear that Palm has a very slim chance of catching up to Apple and Google. So why would a company make a big bet on the third- (or fourth-) best player when it can bet on the second-best?

Some exceptions could be if a company were to want to use WebOS for a wholly different device, like an e-reader or Web tablet, where Android’s existing smartphone apps aren’t helpful. (We’d love to hear other examples.) But even then, it seems more productive to morph Android for those purposes, as several companies are already doing, because the Android-trained developer community will still be bigger.

And, to be sure, perhaps there are some technical things — power consumption, 3D graphics, etc. — that WebOS does better that might make a difference and give Palm’s platform an advantage. Let us know if you can think of any that might upset our argument.

Another licensing problem for Palm is that it would require a TON of licensed device sales to make enough money to matter to Palm, which is burning cash. Microsoft’s Windows Mobile licensing system — which had been a decent success in terms of adoption before Microsoft let its OS decay — never generated any meaningful revenue for Microsoft. (Palm, a former Windows Mobile licensee, surely knows this.)

Palm has tried to license its software in the past, if you recall, which caused all sorts of trouble. This led to Palm’s product and platform divisions working (unproductively) in isolation from each other, and it later led to a Palm spin-off — Handspring, founded by Palm’s original team — building better products with PalmOS than Palm did itself.

Palm later acquired Handspring, and one of its executives, Ed Colligan, was CEO of Palm until Rubinstein took over less than a year ago. (“Piloting Palm,” the history of Palm’s first life, co-written by David Pogue, is a great read, if you’re interested in this sort of stuff.)

But that doesn’t seem like the kind of history that is going to repeat itself.

So while licensing WebOS might make a sexy story to tell potential acquirers or Wall Street, it’s not going to save Palm.

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See Also:

• Palm Is On The Block And Getting Desperate
• Palm CEO Jon Rubinstein Might Be Forced Out
• Apple Has Already Sold More iPads Than Palm Pres Sold Last Quarter

A question for you. When was the last time you surfed the net? Can you remember when you just clicked around looking to discover new sites or a site to occupy your time? Now ask yourself when was the last time you sat on your couch or laid in bed clicking the remote looking for something to watch on TV.  Finally, how long do you regularly spend  on Facebook ?  How much time do you spend checking out your Wall, your friends’ Wall and hopping from profile to profile checking people out?

If you are like most, you kill more time hopping around on Facebook than you do exploring the Net.  IMHO, while good old TV remains the ultimate, passive cure for boredom at home, Facebook is now where we kill time at work, on our mobile devices or while at home with the TV  on.

Everything that the net was 5 or more years ago, Facebook is today.

The interesting thing is that Facebook knows it.  Slowly but surely they are extending their tentacles into traditional websites, mobile apps (android/iphone/Ipad) and soon your HDTV .

It started with Facebook Connect.  It extended with search from inside the Facebook Platform.  Now they are accelerating their extensions through Virtual Currency (a future goldmine as it extends to business), allowing websites to add a Like button with user pictures through a simple widget and much much more. In other words, your favorite website doesnt know it yet, but Facebook is in the process of annexing  it.

Brilliant in its simplicity. Facebook is putting out trojan horse after trojan horse and no one seems to care.  The only thing FB has not done is create a  mobile operating system ala Android/Iphone as a platform for applications.

Why would Facebook create a mobile operating system ? For the same reason Google did. For the same reason that Apple banned Flash and other meta platforms from the Iphone.  The mobile  operating system is the ultimate trojan horse for billions of devices.  If you can create a mobile operating system that phone manufacturers adopt and that becomes a  popular platform for application development, you have hope of controlling your own destiny.  If you are just an application on someone else’s operating system and perceived as a threat you can be “Flashed”.  Does Facebook have a choice but to create a mobile operating system ?

It wont be long, if it hasnt already happened that Google and Apple will see Facebook as a unique threat to their future.  Apple has some level of connection to its customer/users, Google has minimal if any connection to their users. Facebook knows more than all of us like to admit about its users. They have our personal information, our pictures, our friends, our family members, our employers and business associates all in a database and they are extending that information base to what we like on sites outside the Facebook platform.  Plus they are creating their own currency.Just as important is the fact that we are progressively spending more time on Facebook than we are sites and applications that Apple and Google can control .  That is a threat to Apple and Google.

It wasnt all that long ago that the concept of Apple excluding Flash from its mobile platform would have been laughable. Its not any longer. Both Apple and Google have to see Facebook as the greatest threat to their futures. The question is what do they do about it and how does Facebook respond ?

Unlike Google and Apple, Facebook doesnt have 10s of billions of dollars in cash to subsidize development and distribution. They can’t outlast a direct assault from Apple or Google.

Enter Microsoft. Already a shareholder.  Already with a mobile and desktop operating system /development platform. Most importantly, already with billions in cash and the capacity to pay 15 or 20 Billion dollars or more to acquire Facebook.

There is no doubt that this is NOT the direction that Facebook wants to go. They want to remain independent. But just as Apple and Google quickly turned from friend to foes, Facebook will soon be the object that both of those companies see in the rearview mirror.  I dont see either Apple or Google as being suitors to buy Facebook. That isnt their style. On the other hand, its straight out of the Microsoft playbook. If you cant beat them or outlast them, buy them.

Time will tell, but there is no question that Facebook is quickly becoming the biggest threat to the futures of Apple and Google.

This post was originally published on Blog Maverick, Mark Cuban’s blog. It is re-published here with permission.

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See Also:

• Here’s How MarketWatch Got Its Apple-Beat-Microsoft’s-Market Cap Story
• Facebook May Not Be Skynet, But It Is Getting Smarter and That’s Bad For Google
• Microsoft And Facebook Join Forces To Crush Google Docs

Foursquare will reach 3 million users by the end of the summer, says CEO Dennis Crowley.

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Greece asks Europe and the IMF to start paying billions of euros in emergency loans to help rescue its debt-ridden economy.

Brennan LaBrie is a 10-year-old from Port Townsend, Wash. The newspaper he’s been producing for the past two years has 300 subscribers. He covered the Winter Olympics for Time Magazine.

Here he is co-hosting the “New Day Northwest” morning show on King5 TV:

Jealous?

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• Reuters Firing Up New Web Strategy: ‘Financial Video For The iPad Generation’
• Netflix Shares Rocket Past $100 For The First Time Ever
• How To Watch The NFL Draft 2010