Notes from Palm's Investor Conference Presentation | webOS Nation

Notes from Palm's Investor Conference Presentation

by Dieter Bohn Tue, 11 Aug 2009 6:18 pm EDT

As previously announced, Palm's Chief Financial Officer, Douglas Jeffries, presented today at the Pacific Crest Technology Forum in Vail, Colorado today.  We'd like Palm to finally come clean on some real sales numbers for the Palm Pre, but we'll post whatever updates we get as they come in.

Update: That's it, folks, the event is over.  Sadly, no official word on sales numbers for the Pre.  No official word on anything, actually. I had thought I'd heard a juicy tidbit about "billing teams" for the App Catalog, but it turns out it was "Building Teams" and it was just my deep-steated desire to keep carriers out of the payment process that fooled my lying ears.

Anyhow, our original notes on the investor presentation for the most rabid among you, after the break!

Jeffries' opening remarks: 2 years ago they began their transformation - all new executives.  Upgrade to company's engineering team, literally brought hundreds of people in.  Two paths as a part of the transformation on the product front - multi-year product roadmap, web-based Operating System.  If you can control hardware and software design, you have a better product.

Launch of the Pre on webOS with Sprint in June.  New hardware, software, services infrastructure.  Looking to expand the business, methodical approach.  Expand geographically and then expand on product roadmap - new "Iconic products" to expand the portfolio.

Q: What was surprisingly difficult? a: Doing it all at once was a big challenge, but going forward we're definitely going to follow the same strategy. Sprint has been great along the way for marketing, training, launch programs. Now that we're through the launch, reienforced the decision to go with them.

Q: Carrier response has been strong - how should we think about that opportunity in terms of timing and what has to happen to expand that? A: We've been fortunate, really good carrier interest. For us it's been working to find the right partner, looking ahead finding partners with the same strategic outlook as we do. Announced Bell Mobility in Canada, Telefonica in Europe. Going to be methodical about it. We'll be "somewhat measured."

Q: How are you talking with Carriers? A: The conversation around webOS is a more strategic conversation. We come with a product roadmap for the next couple of years.  Discussion moves from "a product" to a more strategic relationship, "Long term relationships."

Q: Next Steps in Launching webOS - Response from the developer community? A: We believe that having apps is fundamental. High priority internally.  We're in a Beta phase with the App Catalog. In the background we're working with developers to expand, thousands of developers have downloaded it, we'd like to move faster, but we want to make sure that developers have a great experience. Also want a great experience for customers.

Q: Briefly mentions PreDevCamp (not by name) - what about Price Point on apps A: Trying to make the experience better for both consumers and developers. High priority, trying to do something new.

Q: Timing?  When is it coming out of Beta? A: As soon as it's ready.  You'll hear it over and over again, "Not until it's ready."

Q: Getting the right amount of developer support from Palm - where are you at? A: We've had really great reaction. Volume of interest is rewarding, we are staffing up to provide more resources.  Scaling up processes, billing teams (!).

Q: Palm brand in US is strong, in Europe not so much.  Single SKU? What will is cost? A: We agree - brand is stronger in the US. Long term opportunity, we want to do it well.  We think Pre is a great device to enter Europe with, but expect more devices down the road.  Telefonica is one of the best marketers in Europe, feel good with them working with us.

Q: Developing concern around other smartphones, pricing pressure, Apple has set a bar from product and price standpoint. A: Our sample size is small - just one product out today. Carriers pay a premium for "iconic" products, Pre has been that sort of device.  We do watch the competition, a lot of new Android products coming out.  Iconic products get to be in a premium niche.

Q: Recap where margins are on the Pre and longterm A: In the process of shifting the company, PalmOS are low margin, webOS having better margins overall.  Talk about webOS as a portfolio.  Newer products have better margins. 30% is where we hope to be for webOS for the whole portfolio.

Q: You're not there yet, how about when? A: As you scale you gain efficiency, that 30% margin is over time, later in the year 2010.

Q: Component constraints? A: We're keeping an eye on it. Also looking towards longer term contracts.  [More talk about supply chain, etc.]

Q: What is your biggest challenge, what should investors be aware of? A: The product is solid, performing well, both the Hardware and webOS.  The launch is a good test for the Executive team, they came through really well.  We just need to execute, the right people at the right time, just watch for a pattern of execution.

Q: The headcount is down from 2 years ago, will that rebuild? A: It was 40% turnover in that period in employees.  Reinvigorating the company. We're through that, we'll add staff in a measured way. We'll avoid needing to downsize again

Q: Concern about being able to finance significant growth. You said you have capital on hand, but what might change that? A: We have a plan in place, we have the capital in hand to execute on that operating plan. If things go well, we may want to 'step on the gas' and bring in additional capital to accelerate expansion and growth

Q: Strong relationship with Sprint, the investment community is sensitive that you haven't been as 'effusive' about them as recently. A: I'm not sure that the tone has changed. The most recent was the earning call, they were complimentary. 

 Q: Getting apps on the Pre A: It's the most frequent request we have on the Pre from consumers.  A couple of things: it's the easiest to develop for. We've got functionality that other platforms don't have - multitasking + synergy + unobtrusive notifications.  The developer experience is very important to use, we're spending a lot of time with developers. So it will take time, but early results are good.

....and that's it, folks!