Apple
The debut of the touch-screen Pre is critical because Palms sales have dropped for two years as consumers snubbed its devices for the iPhone and Research In Motion Ltd.s BlackBerry. Sunnyvale, California-based Palm hasnt reported a profit since June 2007, the month Rubinstein became its executive chairman.
“It really is the whole ballgame,” said Lawrence Harris, an analyst at CL King & Associates in New York, who has a “neutral” rating on Palm shares. “This device has to succeed.”
Also on the line is the $425 million invested by Elevation Partners, the venture capital firm led by Roger McNamee to fuel the Pres development. Palm shares have more than quadrupled on anticipation for the phone. Early accolades from reviewers such as the Wall Street Journals Walter Mossberg, who deemed the Pre a powerful competitor to the iPhone, signal Rubinstein may have absorbed enough of Apples design flair to make the Pre a hit.
“I helped to create a lot of the engineering culture at Apple during the turnaround there,” Rubinstein, who worked with Steve Jobs for more than 15 years, said last week during a technology conference in San Diego. “Palms engineering culture has a lot of how Apple runs instilled into it.”
Palm is counting on his expertise to revive the handheld- device pioneer, which reported a 71 percent drop in revenue last quarter to $90.6 million, and has swallowed losses the past seven periods totaling almost $750 million dollars.
Very Conscious
A former Hewlett-Packard Co. executive, Rubinstein, 52, led hardware engineering at NeXT Inc., the computer company Jobs founded after he was fired from Apple in 1985. After NeXT sold the hardware business, Rubinstein started his own company before joining Cupertino, California-based Apple in February 1997, five months before Jobs returned to lead the beleaguered company.
Rubinstein helped develop the all-in-one iMac computer in 1998 and the iPod music player in 2001. Now hes been tasked with creating a game-changing device that puts Palm in direct competition with his former employer.
His team at Palm created the WebOS operating system, designed exclusively for mobile devices. The iPhones system is adapted from the Macintosh OS X software that powers computers.
Apple is “very conscious of Palms entrance as a new competitive threat because the hardware is attractive and more importantly, the operating system looks to be very good,” said Andy Hargreaves, an analyst at Pacific Crest Securities in Portland, Oregon. “Apple has had the advantage when it comes to the operating system.”
Brainstorming Over Tequila
“We hung out for a couple of days, did some brainstorming, drank some margaritas and brainstormed some more,” Rubinstein said at the Pres unveiling in January about his decision to return to California. “It was an incredible product opportunity, and Im a product guy.”
When Rubinstein left Apple in 2006, the iPod had conquered the digital media market. More than 208 million have been sold, and the gadget accounted for 28 percent of Apples $32.5 billion in sales last year.
“Palm had a very hard time doing new product design quickly and launching it effectively — those are things that Apple has excelled at,” said Brad Williams, a fund manager at MTB Investment Advisors Inc. in Baltimore, which holds Palm shares among $14 billion in assets. “You bring somebody over whos played a major role there, the impact they can have in terms of improving Palm is pretty significant.”
Engineers Engineer
Rubinsteins skill is in knowing how to assemble a good team, keeping good people and replacing others, said Clent Richardson, who worked with him at Apple from 1998 to 2001.
“Jon is an engineers engineer who also has a pretty unique gift to understand and anticipate whats cool,” said Richardson, now CEO of Immersion Corp. in San Jose, California, which develops touch-screen technology. “If you take a look at his track record, the teams he built, hes also in the midst of doing the same thing at Palm.”
Mike Bell joined Palm in January 2008 after 16 years at Apple, where he oversaw the microprocessor software that powers the Mac hardware. Jeff Devine, put in charge of global operations in July 2008, came from Nokia Oyj. Michael Abbott, who leads application software and services, ran .NET services at Microsoft Corp.