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Palm Apps To Expand

Sunnyvale, Calif. — Palm expects a large boost in the number of applications for its newest Pre smartphone, and it has discontinued producing traditional handhelds to focus on smartphones exclusively.

Chief financial officer Doug Jeffries said of traditional PDAs: “While inventory is still available for sale to the retail channel and distributors, we are no longer manufacturing handhelds and focusing all our resources on smartphone products.”

On a conference call with analysts on June 25, Palm CEO Jon Rubinstein said the Pre, released earlier this month, “is by far the best product we’ve ever launched,” and said the product is in minor backorder as demand exceeded supply. “There’s been a short wait for product. We’re working as quickly as possible to catch up with demand,” he said.

The company said over-the-air update software for the Pre will be forthcoming and claimed thousands of developers are expected to work on apps for the Pre in the next few weeks as Palm broadens availability of its software developer kit (SDK). “We’re confident that before too long, we’ll narrow the gap with competitive app offerings,” said Rubenstein. Until now, Palm limited availability of the SDK to hundreds of developers.

Rubenstein said the number of apps for the Pre has grown from 150,000 at launch to more than a million, which he characterized as “impressive, considering the app catalog is still in beta, preview-only phase.”

Although pressed by analysts, Palm skirted all questions on broadening the Pre’s availability through carriers other than Sprint. Rubenstein said only, “We’re very flattered that lots of carriers are interested in WebOS and the Pre. We are obviously working on expanding our distribution. But we have nothing to announce at this point in time.”

Palm reported a net loss of $105 million for the fourth quarter, ended May 31, compared with a loss of $43.3 million for the period a year ago. The Palm Pre was launched June 6, after the close of the period.  Analysts estimated Palm has shipped about 150,000 Pre units so far, said Reuters.

Palm said it shipped a total of 351,000 smartphones during the quarter, representing a year-over-year decline of 62 percent. Smartphone sell-through was 460,000 units, down 52 percent.

Revenue fell 71 percent to $86.8 million, but revenues were reportedly higher than analyst expectations of $80.6 million.

Palm claimed it is well positioned to take advantage of the expected doubling in smartphone sales by 2013. Rubenstein noted that smartphone penetration is just 11 percent globally and 19 percent in the U.S. “This means that hundreds of millions of users will replace old-fashioned cellphones with smartphones. Only a handful of companies have the software and product design capability necessary to exploit this enormous market shift, and such significant growth means there’s room for three to five players to win in this space. We don’t have to beat each other to prosper.”

He also hinted that Palm has another “really great” product in the pipeline but offered no details.