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Palm (Nasdaq: PALM) has decided to cancel the current iteration of its Foleo product, an ultralight, Linux-based "mobile companion" device that had analysts scratching their heads when it was first announced.
In a post on the Palm blog, CEO Ed Colligan told readers that he has decided to cancel Foleo mobile "in its current configuration."
Instead, Colligan wrote, the company plans to "focus all of our energies on delivering our next generation platform and the first smartphones that will bring this platform to market."
Out of Focus
The reasons he gave include a need to focus on one platform -- Foleo is based on a separate development environment -- as well as market feedback that indicated the need for improvements to Foleo shortly before its intended launch.
The cost of the decision to Palm is significant, and includes a charge against earnings of "less than $10 million," the company said.
That figure, however, pales beside the costs of supporting two platforms, one of which is not core to its product development, Colligan noted.
Perhaps more damaging to the firm is the disappointment by the developers and third-party vendors that had been preparing for the Foleo launch.
To cite one example, TealPoint Software announced in July it was partnering with Palm to offer Foleo customers a full suite of security, entertainment and productivity applications, including TealSafe, TealPaint, TealDiet, SudokuAddict and ShortCircuit, with more applications to follow.
Foleo II Still Possible
Colligan, though, left the door open to another version of Foleo, which he said has enormous potential. "When we do Foleo II it will be based on our new platform, and we think it will deliver on the promise of this new category."
What Foleo II will look like, however, is anyone's guess. When Palm described the specs for the initial product, analysts were concerned the company was straying too far from its smartphone core competency. Billed as a smartphone companion, it was to have its own Linux OS and WiFi connectivity -- but not the functionality of a notebook computer.
Focusing on the Platform
The market, however, for such a product -- perhaps better described as a backup or auxiliary to the smartphone -- is uncertain.
"Palm is not in a position right now to be taking too many risks," Ryan Reith, research analyst with IDC, told TechNewsWorld.
Reith believes that Palm re-evaluated the product's prospects and realized it would have far greater market support with a next-generation Treo on a Linux-based platform.
Furthermore, the company does not need to be distracted from the development of its Linux-based platform, Reith added.
"Palm has expressed to us for over a year they are really focused on developing this platform because they expect it to revolutionize their Palm OS."
The Foleo was the wrong device to bring to market with that platform, he concluded.
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