Palm Inc chief executive officer Ed Colligan says he is ignoring calls to sell the phone maker and is focused on winning back sales lost to Research In Motion Ltd (RIM) and Nokia Oyj.
"I can't sit here and worry about that," he said in an interview at Palm's Sunnyvale, California, headquarters. "I can only worry about how the business is performing and what can we do as a team to do better, to get our products out faster, to drive for higher reliability, to grab more market share."
Palm's Treo, introduced in 2002, helped create the market for handsets offering functions such as e-mail, and forced RIM to add a phone to its BlackBerry messaging devices. Since then, RIM has introduced products faster, and Motorola Inc and Nokia challenged Palm with cheaper e-mail phones for consumers.
Colligan is under pressure to produce a hit device to combat the BlackBerry as well as products from Motorola and Nokia and Apple Inc's iPhone, coming out in June, said Casey Ryan, an analyst at Nollenberger Capital Markets in San Francisco.
"They need to come up with more innovative devices to compete," said Ryan, who rates the shares "neutral" and doesn't own them. "That's what they used to be known for."
Palm spent the past two years copying a design from larger rivals including Nokia that includes a standardized core to cut production costs and get handsets built faster. Using the same base in all its phones will let Palm create a new handset in nine months, down from as much as two years, Colligan said.
New devices built this way go on sale this year, he said.
Palm will discuss its strategy with investors in New York today.
The design change allows Palm to use fewer parts and buy larger quantities of a single component, cutting material costs 30 percent, said Stephane Maes, a director in charge of Palm's product lines.
That may open up markets beyond business users. Palm may be able to sell phones for as little as US$99 with a contract, down from as much as US$399 currently, Maes said.
Survival depends on Palm's ability to create devices for making calls and sending e-mail that competitors can't replicate, said Tony Carbone, an RCM Capital Management analyst in San Francisco.
Palm's sales this fiscal year may grow less than 1 percent, according to a Bloomberg survey of analysts. Nokia's revenue may gain 17 percent and RIM may rise 47 percent.
Palm's share of the global market for phones with e-mail and computer-like functions shrank to 2.8 percent in the fourth quarter from 3.3 percent a year earlier, said market researcher International Data Corp. Nokia dominated with 47 percent.
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