Want CNET to notify you of price drops and the latest stories?

Rock bottom for Palm and Hawkins?

Palm CEO Ed Colligan made the right decision to dump the Foleo. But how will Jeff Hawkins and Palm bounce back from the admission that they badly misjudged the market for a weak laptop?

Tom Krazit Former Staff writer, CNET News
Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.
Tom Krazit
3 min read

Suddenly, it seems even more fitting that a company called Elevation Partners recently took a stake in Palm.

This might be rock bottom for the storied mobile-computing company. The decision to cancel the Foleo even before letting people get their hands on it is an embarrassing admission that Palm's vision of the computing world is way off base from the rest of the world, and it's a black mark on the otherwise stellar career of Palm founder Jeff Hawkins.

It's hard to dump too much on Hawkins. The man invented the Palm Pilot and the Treo. I once invented a novel method of stacking beer cans in a fridge (the key is not to buy any food). But after Hawkins unveiled the Foleo at the D: All Things Digital conference--arguably the most prestigious gathering of the computing elite--with proclamations like "it's the best idea I've ever had" and "the most exciting product I have ever worked on"--Palm's decision to cancel it without even a product launch must be mortifying for Hawkins.

Now, Hawkins has his own company, Numenta, which is trying to develop a computer that works like the human brain. If he pulls that off, we'll forget all about the Foleo.

But what is Palm going to do? Speaking of mortifying, Ed Colligan must be wondering why he gave Hawkins $10 million to go down into the basement and come up with Palm's Next Big Thing, only to emerge with the Foleo. Almost universally panned by analysts and bloggers, the Foleo was a lightweight Linux "mobile companion" that was designed to read e-mail, but didn't work with corporate e-mail software from RIM or Motorola, among a multitude of other sins.

Palm founder Jeff Hawkins (right) shows The Wall Street Journal's Walt Mossberg the Foleo, canceled Tuesday by Palm. CNET Networks

Palm has squandered its position in the mobile-computing world by failing to improve its operating system since 2004, come up with a noticeably different Treo since the Treo 600, or clearly articulate any vision of where the company thinks smart phone development is headed. The company wisely hooked up with Microsoft to ship Windows Mobile Treos, otherwise this post might have been written a year ago. But it has watched companies like Motorola, RIM, LG, Nokia and even Apple pass it by while it tried to make its biggest splash of the year with a product canceled just three months later. Imagine the reaction if Apple had canceled the iPhone in April.

Jack Gold of market research firm J. Gold Associates thinks Elevation Partners is starting to throw its weight around a little. "Hopefully they are coming in and cracking the whip and making them do the right thing," he wrote in a research note distributed Tuesday. After all, Palm clearly still hasn't found what it's looking for.

Palm also announced Tuesday that Bruce Dunlevie of Benchmark Partners is resigning from Palm's board, while Scott Mercer will stay. Mercer was going to resign from the board to make way for Fred Anderson and Roger McNamee of Elevation Partners, but now Dunlevie (who's also on the board at Numenta) is out. Anderson and McNamee haven't formally assumed their positions yet as the deal hasn't formally closed, but perhaps their impact is already starting to be felt.

While it's embarrassing, Colligan made the right decision. You've got to know when to fold them, and the Foleo wasn't going to beat anything better than a pair of sixes.

You're supposed to have an intervention after the downtrodden hits rock bottom, but Colligan's moment of clarity could still allow Palm to recapture some of its past glory.

However, Palm better think long and hard before the next time it tells people it's about to change the world of mobile computing. The company is in danger of watching a category it helped create leave it in the dust.