MOUNTAIN VIEW, Calif. — If anyone knows how best to survive a corporate near-death experience, it is Jon Rubinstein.
Ed Colligan, left, Palm’s chief executive, and Jon Rubinstein, the executive chairman, who was hired to revive the company.
In 1997 the former Hewlett-Packard engineer was asked by Apple’s founder, Steven P. Jobs, to lead the hardware engineering division at the company, which was then struggling. Apple was wallowing in financial losses and the Mac’s appeal was waning. Mr. Rubinstein agreed, and over the next nine years he and his team of engineers breathed new life into the company by helping develop the iMac and the iPod.
Those experiences should serve him well as he seeks to resuscitate Palm, whose roots in Silicon Valley go back to the PalmPilot, the revolutionary handheld computer, and the Treo, which turned heads as one of the first smartphones.
In recent years Palm lost its way. Its share of the smartphone market has been halved to about 16.9 percent over the last two years. First, Research in Motion found the sweet spot of business users with its BlackBerry. More recently, Apple grabbed consumers’ fancy with the iPhone.
Palm has tried to innovate beyond the five-year-old Treo with little effect. It announced with great fanfare last year that it would build the Foleo, a cross between a smartphone and notebook computer, only to cancel the project three months later. While cellphone makers like Samsung, LG and R.I.M. brought out products to compete with the iPhone, Palm has told Treo loyalists and investors to be patient. They will need to be. Palm’s stock price is down 90 percent since its high in March 2000.
Mr. Rubinstein, the executive chairman, said he is convinced he can bring Palm back. “Everyone is trying to make an iPhone killer,” he said. “We are trying to make a killer Palm product.”
Roger McNamee, a partner in the venture capital firm Elevation Partners, brought Mr. Rubinstein into the company in June 2007 as part of Elevation’s deal to invest $325 million in Palm. (Elevation now owns a 25 percent stake.) Mr. McNamee gave him a mission: shore up product design and software. Mr. Rubinstein scrapped existing product plans. He has been recruiting top executives from Apple and Microsoft. And he is focused on redesigning Palm’s out-of-fashion operating system.
On Wednesday, he and Ed Colligan, Palm’s chief executive, will announce the debut of a new smartphone primarily for business customers — the Treo Pro.
Slimmer and more elegant than current models, the new Treo will not solve Palm’s troubles, but its larger keyboard and screen that is flush with the phone’s chassis make it more user-friendly than Palm’s old calculator-like design.
The real test of the new team’s leadership will come in the first half of next year. That is when Palm plans to announce a next generation of software — and a new device — which it hopes will make it easier for consumers to surf the Web and network with friends and colleagues.
Wall Street remains skeptical. “It’s a binary outcome; it can go one way or another,” said Jonathan Goldberg, a senior analyst at Deutsche Bank Securities in San Francisco. “They already have an aging product. If these new devices are great, the stock price will go up. If they are late, it will go lower.”
Mr. Rubinstein is putting the onus on Palm’s employees to revolutionize the company from within. “I’m not going to save this company,” he said in an interview at Palm’s offices. “They are going to save the company.”
Stephane Maes, vice president of smartphone product marketing, likes to tell a story about his first meeting with Mr. Rubinstein. It was July 2007 and he and a team from Palm were summoned to Mr. Rubinstein’s beachside home outside Puerto Vallarta, Mexico, to discuss coming products.
Mr. Maes had loaded his backpack with about 30 different devices to show Mr. Rubinstein. And for three days, Mr. Maes said, Mr. Rubinstein questioned the team on the devices. After listening to their explanations, Mr. Rubinstein canceled several Treos in development. It was a tough session because Mr. Rubinstein thought there were too many products. He demanded design changes in phones only months from release.
One was the Centro. He saw some hope for the device, which Palm was readying for a fall 2007 debut. But the Palm engineers had not got that quite right either. Mr. Rubinstein dispatched a team of executives to Taiwan and China to oversee production more closely. He made them redesign the battery panel on the back so it didn’t squeak. And he asked for fixes to the software so it would lock up less frequently.
One thing he wanted to fix was the fit of the phone’s plastic pieces. When he went around the room and asked who was in charge of that, no one spoke up. Mr. Rubinstein did not relent. “I asked until I found out,” Mr. Rubinstein recalled saying. “Then I said, ‘O.K., what do we have to do to get it done?’ ”
“In the past that might have slipped by,” said Brodie C. Keast, a senior vice president for marketing at Palm.
To ensure accountability, Mr. Rubinstein has regular status reviews where each product is pored over and discussed.
Even the Treo Pro’s packaging was modernized. It looks surprisingly (or maybe not so) like the jewel-box-size package Apple used for the iPhone.
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