The next few months will be make or break for Palm ( PALM), which is looking for major upside from its upcoming WebOS operating system and its Pre handset. Palm has been struggling with widening losses and slumping demand for its smartphones, raising the stakes for its new technology. Investors have high hopes for WebOS and the Pre handset, pushing Palm's stock up 200% since the start of 2009. Telecom giant Sprint Nextel ( S) will start selling the WebOS-based Pre during the summer, and the smartphone is already being touted as a challenger to Apple's ( AAPL) iPhone.
Deutsche Bank analyst Jonathan Goldberg recently raised his price target for Palm's stock, citing confidence in the Pre's potential. WebOS demos have already garnered positive feedback, and the operating system will be a key weapon in fighting other smartphone operating systems, such as the Google ( HPQ) Android being used in Motorola phones. Early reviews have cited WebOS' stability and speed, as well as its multitasking capabilities, letting users quickly jump from one application to another. WebOS has even been cited as a possible target for Hewlett-Packard ( HPQ), which is said to be searching for an entry into the smartphone market. Like the iPhone, the Pre uses a touchscreen, something that has become ubiquitous among cutting-edge smartphones. Despite these aces in its pack, however, Palm still faces tough competition from other smartphone companies. The Sunnyvale, Calif.-based firm must also win the developer community over to its WebOS, and get as many telecom firms as possible to sell the Pre.
Initial signs, however, are positive and Palm is already looking to expand its partner footprint, according to Matthew Thornton, an analyst at Avian Securities. "Management commentary suggests Pre launch remains very much on schedule with focus on establishing additional carrier partnerships and engaging the developer community," he wrote, in a recent note. Initially, however, attention will be focused on Sprint, which is betting big on Palm's Pre phone to edge out rival T-Mobile. The telecom firm will be the first wireless carrier to offer the smartphone when it debuts during the summer, and the Pre has already appeared in Sprint TV ads.