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By Seb Janacek, 8 July 2009 09:00

COMMENT

Palm is challenging Apple in the smartphone space, big time. Seb Janacek looks at why the impending face-off is so important.

The Palm Pre - which we've just found out will be carried exclusively by O2 in the UK - is undoubtedly one of the most interesting new challengers to the smartphone market and to the iPhone in particular.

It's a hugely compelling product launch for Palm - and for Apple, for a number of reasons.

Firstly, because it is unashamedly an iPhone competitor in every sense of the word. Palm's marketing has positioned the Pre as everything you ever wanted in an iPhone and were tired of waiting for - at least prior to the release of the iPhone OS 3.0 update.

Most notable among these features is a little slide-out keyboard and the mythical copy-and-paste function. The Pre has also been released at a time when early iPhone adopters' contracts are drawing to an end.

Secondly, Palm is made up of a large number of former Apple employees who have brought with them a wealth of insider product and marketing information.

Palm's CEO Jon Rubinstein is Apple's former iPod chief. Rubinstein and Apple chief Steve Jobs go way back - Rubinstein worked at former Jobs venture NeXT, then followed Jobs to join the Apple hardware team in 1997.

Thirdly, the way in which Palm has engaged its main competitor so aggressively has caused a few raised eyebrows. One of the Pre's marketed features is essentially a hack of Apple's iTunes software.

The controversial feature is its ability to sync music with Apple's iTunes music software, which it does by effectively pretending to be an iPod when connected to a computer.

Apple's COO Tim Cook has already fired a shot across Palm's bows when he said that the company welcomed competition as long as it wasn't stealing their IP.

Apple didn't tolerate the hacking influences of Real when it tried to break Apple's DRM technology for its own commercial benefit.

The Cupertino company has already indicated that it will adopt a zero tolerance approach to its new competitor. In an article published on its support site recently, Apple highlighted to consumers that it doesn't provide iTunes support for third-party media players.

The decision to effectively hack iTunes but also market it as a key feature is a risky strategy for a company which has invested all its hopes on the Pre. The Pre could be Palm's saviour or it could prove the final nail in the coffin.

The company reported a dismal quarter for the three months ending 30 May. It reported a loss of $91.5m compared with a year-earlier loss of $41.1m. Revenue fell 71 per cent to $86.8m.

However, with the mix of features and people behind it Palm represents a real challenge for Apple and the iPhone - if it can remain commercially viable.

On a personal note I'm delighted with Palm's arrival and despite being an iPhone owner it's great to see another innovative company enter the market.

In the last week, I've played with the HTC Android phone and the Nokia N97. I was left unsatisfied with the clunky, plasticky feel of the former and the unresponsive touch interface of the latter (as well as its terrifying slide-out keyboard action that threatens to send the phone flying out of your hands and across the room).

The appearance of the Pre on the scene is exciting. I have yet to play with a Pre but can't wait. I was an avid fan of Palm's PDAs and owned a IIIx and the gloriously sexy Vx. As touchscreen devices go they were up there with the Newton as the most innovative user interfaces, until the iPhone came along.

Initial sales of the Pre have been encouraging but not comparable to sales of the iPhone. It currently has few applications in its own online app store but these are early days.

In a recent statement, CEO Rubinstein said: "The launch of Palm Web OS and Palm Pre was a major milestone in Palm's transformation; we have now officially re-entered the race.

"We have more to accomplish, but the groundwork is laid for a very promising future here at Palm."

Amen to that.