Treo Follow Up - Poor Quality Hits the Bottom Line

Today's Headline in Bloomberg

"Palm Forecast Misses Estimates as Customers Defect (Update4)

Dec. 18 (Bloomberg) -- Palm Inc., the maker of the Treo e-mail phone, forecast a wider loss than analysts had estimated after customers defected to the BlackBerry and iPhone. The shares plunged 11 percent in late trading."

Now this article attributes the losses to the following, "Palm has trailed BlackBerry maker Research In Motion Ltd. in updating product design."

I don't think so. This is not a feature thing. The latest version of the Treo has more features than the top of the line 8830. The issue is reliability and refinement. What's refinement? Read a Consumer Reports auto review. You know when you have it vs. when you don't. In Blackberry's case, it is that the features work as expected. When you are using voice dialing, it works. If you need to flip to speakerphone, there's no issue. Email is clean and synchs beautifully with your desktop. You are given options on how you might contact someone. Even though you can't jump by touching a point on the page, you are willing to sacrifice that for a screen that doesn't get dirty. Moreover, the damn thing never freezes while you are typing a message.

See, Palm has to spend a lot of money on marketing it's products. They are not getting positive word of mouth from their existing products. They need to suck people into a feature comparison and hope they are not dumb enough to talk to other people. Palm also has to hope the cell phone store salespeople keep quiet when someone is looking - even though it is in their incentive to have happy customers. In a market where margins are razor thin, spending extra money on marketing to acquire new customers without retention is a loss machine.

Then Palm goes totally low end with the Centro with the worst of all carriers - Sprint. At least in their case the user does not know who to blame poor quality service on. It's like putting 2 bad tennis players together to make a good doubles team - good luck.

I just used my Blackberry 8830 on a round the world trip. Whether I was in Germany, India, Thailand or Singapore I had email, web and voice access. If I had problems, I called the Global Support line and they fixed it quickly. Most of the time, it was in obscure locales where the phone needed to differentiate carriers. The best part was that I could be IM with my son while on a bus in Thailand. I was in touch with my clients and team everywhere - very cool.

Bottom line: build quality and reliability for long term profitability.