Palm, which lost its footing in the competitive smart phone market this past year, is turning to private equity and some former Apple execs to help it reinvigorate its product lineup.
But will it be enough?
That's the big question that Wall Street investors and gadget gurus will be looking at over the next 18 to 24 months.
On Monday, Palm said it would sell 25 percent of the company to private equity firm Elevation Partners for $325 million. Elevation Partners was founded by Fred Anderson, Apple's former CFO, and Roger McNamee, who will now sit on Palm's board, replacing Eric Benhamou and D. Scott Mercer. The company also said it would bring on Jon Rubinstein, who formerly ran the iPod division at Apple, as executive chairman of the board.
The deal comes as Palm, which essentially invented the smart phone category with its popular Treo product, tries to regain its position as a leader in an increasingly crowded market. Over the past couple of years, everyone and their brother--from BlackBerry maker Research In Motion to the big handset makers Motorola, Nokia and Samsung--have been introducing so-called smart phones that combine phone functionality with e-mail and Web surfing capability, competing directly against the Treo.
And now Apple's iPhone, which is already generating unprecedented buzz, is only weeks away from launch on AT&T's network.
Meanwhile, Palm has been struggling to keep up with competitors in terms of new features and functionality. In recent months, rumors have floated around Wall Street that the company might be ripe for a takeover, with bigger players such as Motorola and Nokia mentioned as potential suitors.
In the middle of this ultracompetitive market, Palm introduced its latest product, a miniature Linux-based laptop dubbed the Foleo, which has left many experts scratching their heads. The 2.5-pound keyboard and computing device, which is designed to attach to a Treo so people can type more easily, was announced last week, but so far has gotten a lackluster reception.
"The company has been under tremendous pressure to do something," said Tavis McCourt, a managing director at Morgan Keegan & Company. "The company has missed a product cycle, and it's good to change things around to signal to investors that something new is coming."
