Palm, New Device Out of Touch

Foleo, which runs the Linux OS, is a dumbed-down laptop. The device only offers an on/off option, and without a hard drive users cannot store anything on the machine itself.

Shares of Palm were up 25 cents, or 1.5%, to $16.53. The stock has been almost flat in the three months since Feb. 28 but up nearly 17% in the year to date largely on buyout speculation.

Foleo also bucks the two biggest trends in the mobile computing market: the demand for slimmer devices and the desire to carry fewer gadgets in the bag. Owning a Foleo means most users will have to carry three devices -- phone, Foleo and laptop.

"Palm seems to have put its priorities in strange places," says Kort. "There is some truth to their thinking that people need full keyboard and larger display than what is available currently on a smartphone, but users don't necessarily want to carry around a 10-inch display-size separate device."

Palm has been facing stiff competition from rivals including BlackBerry maker Research In Motion(RIMM) and Motorola.

Foleo now seems like a sign of the company's desperation.

"Palm has no choice," says Carmi Levy, an analyst with industry research and consulting firm, Info-tech Research Group. "They couldn't introduce another derivative or evolutionary product.

Kudos to Palm for taking a chance with the Foleo, but I am not sure if this is the right bet."

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