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Sep. 19, 2009

Things aren't going too well for Palm. The company just said it is abandoning its efforts to develop Windows Mobile-based handsets and instead will focus on its "webOS" in-house operating system, company President and CEO Jonathan Rubinstein said during a conference call.

He added "while there are still Centros and Treo Pros moving through the sales channel, our future engineering efforts will be based around our own operating system. To build really great consumer products, you have to control the entire experience and own the operating system. That makes basic business sense."

The Palm Pre's extremely slow sales topped off an otherwise grim quarter for Palm. The company saw its sales go down to $68 million from $86.7 million last quarter and its losses widened to $161.1 million from a loss of $91.52 million last quarter.

Things are not going wll in deed.

Palm is pushing forward with mobile devices despite the Pre's disappointing sales. Palm reduced the price of the Pre to $149.99 with rebates and a two-year contract with Sprint and also announced a new handset, the Pixi.

The sleek handset is customizable and features a full Qwerty keyboard. Like the Pre, it will be sold exclusively through Sprint in the U.S.

The move to ditch Windows' OS comes as Palm reported sluggish sales of its flagship handset, the Palm Pre. The smartphone was touted as an iPhone-killer before it was released in June but the Pre has failed miserably to live up to the hype.

Though Palm is refusing to break out sales of the Pre, the company shipped a total of 823,000 units during its latest quarter, the vast majority of which were attributed to sales of the Pre.

Palm also said it will be adding new features to its webOS, though it declined to provide specifics. The company said a fifth update to the Pre will be "coming soon." By comparison, Apple's iPhone 3GS sold 1 million units within five days of its June release and managed to sell 5.2 million of the devices in one quarter alone.

Palm has sold just 1.3 million Pre handsets in the past two quarters, according to generally accepted analysts' estimates.

Palm's quarterly earnings releases occur every 13 weeks. The three months ended May 31 marked the company's fourth quarter. The three weeks ended August 31 marked the companies first fiscal quarter for 2010.

Palm has not yet provided an archived audio recording of the conference call.

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Source: Palm.