Palm, New Device Out of Touch

Palm(PALM) has stumbled badly.

After months of anticipation and "secret" development efforts, the company took the lid off its much-anticipated new product Wednesday and revealed "Foleo", a small laptop-size device that it bills as a companion to the smartphone, which enables users to edit documents and check email on the go.

But the gadget has left analysts scratching their heads and wondering if Palm is irrevocably out of touch with the larger trends in the market and with what customers are really looking for.

Foleo is simply too limited in its use: It doesn't have a hard drive, runs the Linux operating system and falls into an in-between space, being larger than a phone and smaller than a laptop. The device basically just adds to the gadget clutter that users want to free themselves from, say analysts.

"I think this is going to be a massive failure," says Todd Kort, principal analyst with research firm Gartner. "The device is simply too big, too heavy to be carried around, and I think there are going to be better phones and laptops that will fill the need in a more sophisticated way."

The failure of Foleo will be costly for Palm. The creation of the device was closely followed by analysts and industry observers both, because it was touted as something that had the potential to become a third line of business for Palm, in addition to its mobile handset and smartphone lines.