If there was any doubt that the upcoming Palm Pre is being poised as an iPhone competitor, some recently discovered documents about Palm’s financial plans can put those thoughts to rest. According to Palm’s Subscription Accounting plan for the Palm Pre (PDF link), all revenue and expenses for the device will be distributed across 24 months – the required 2-year contract period for new Pre owners. What this means is that Palm will account for device sales immediately, but plans to use the subscription fees to fund ongoing R&D efforts. For Pre owners, the documents promise “new software features free of charge.” Sound familiar? It should – it’s the same accounting model used by Apple for their iPhone.
But while Palm’s subscription accounting plan mimics that of the iPhone, statements from the company’s CEO prove Palm has other intentions for their webOS platform – and Pre is only the beginning of their efforts.
Free Updates, Just Like the iPhone
With subscription accounting, a company can use the revenue generated from the subscription service and spread it across the life of the service while revenue generated from the device is accounted for immediately. This allows a company to present a gradual increase in revenue as more devices are sold. The revenue generated from the subscription service can then be used for other things, and in Palm’s case, those other things will be ongoing R&D efforts leading to improvements to the phone.
For Pre owners, this means they, like iPhone and iPhone 3G owners, can expect to receive free software updates for as long as they have the phone under contract. (This is also why iPod Touch owners have to pay for their updates.) In other words, whatever the Pre looks like upon launch, it’s only going to get better.
Not Just One Handset: More WebOS Phones Coming
Another interesting note from these new documents is the fact that, when referring to these promised updates, Palm didn’t just say they were for the Pre. Instead, the documents state that the free updates will be for “customers of its webOS products, including the recently announced Palm Pre.”
That statement points towards Palm’s intentions to build an entire product line built on the webOS – something that was basically confirmed Thursday when, on a conference call with analysts, Palm Chief Executive Edward Colligan promised that a road map of smartphones and an entire application ecosystem was in the company’s future.
This is where Palm differs from Apple. Apple built one software base and installed it on one handset, albeit one that has seen hardware upgrades over time (i.e. iPhone to iPhone 3G). Palm, however, is envisioning a software product line that can extend itself across a variety of handsets. For customers, this means more choice when it comes to handsets. And for Palm, they hope this ecosystem will return the company to financial stability – just like they had back when Treos ruled.
If Palm fumbles in any way, it could be the end for their company. Let’s hope that’s not the case. Anticipation for the Pre is high – all Palm has to do is deliver.
