Palm’s troubles represent a familiar theme: how to re-brand a failing company, and turn it back into the success that it once was.

Palm will be getting a much needed injection of cash from Elevation Partners, in the amount of $100 million USD.  In details disclosed in a Palm company press release on Monday, Elevation Partners will buy shares of Palm’s stock at a 31% premium over current market prices.  News of Elevation Partners’ investment has sent Palm’s stock price up, currently trading at $3.57, up from a low of $1.42 just earlier this month.

Will the injection of cash be enough to keep Palm from going under?  It certainly wouldn’t be impossible, but it’s definitely going to be a challenge.  Palm had a miserable Q2 FY09, selling just under 600,000 total smartphones, with a pre-tax loss of $97.7 million USD, and a total gross profit decrease of over 60%.  The smartphone market got a lot more company with Google releasing their Android OS, and Apple’s iPhone continuing to dominate sales of new smartphones.

Is the next generation of Palm a no-go?

Palm’s hopes are now centered around the release of its Nova operating system with a new smartphone to match.  The ironic thing, though, is the name “Nova” itself.  It’s already got a stigma attached to it – those old Chevy Novas weren’t exactly known for their reliability, safety or utility.  And I’m sure most people have heard the urban legend that “Nova” didn’t sell in Spanish-speaking countries because “no va” means “it does not go,” or “it does not work.”  Despite that being debunked, the fact that the urban legend itself persists lends insight to how people think about the name “Nova.”

Palm’s Nova is supposed to be filled with Web2.0 goodness.  Lots of Internet connectivity, and a good web browser.  All of that loveliness.  But where it begins to get messy is Palm’s tri-pronged focus: Nova for the consumer market, Palm OS for consumers and “prosumers” (Palm sold the Palm OS, but still owns a license to use and modify it), and Windows Mobile for the enterprise users.  Yes, that’s right: three operating systems, all targeted at different markets.

Looking to Apple as an example of a technology company rebirth.

Palm could learn a lot from Apple.  The ironic thing about that statement is: they already have.  The original Palm Pilot was a huge step up from Apple’s failed Newton PDA.  The Newton was too bulky, and was very bad at recognizing handwriting.  Palm solved this problem by inventing their own text entry system with custom gestures for letters.  It took a while to get the hang of entering text with the Palm, but the pros could write in text just as fast as scribbling it down on a notepad, and the Palm devices were more compact and lighter than the Newton.

Apple was once on the verge of entering the technology dustbin.  Before Steve Jobs returned to the company as CEO in 1997 (after having left in 1985), Apple was slowly dying.  They were losing market share, and they had lost touch with what made them successful.  One of Jobs’ first actions as CEO was to cut the Newton, amongst other projects.  Jobs helped to usher in the new iMac in 1998, which re-invigorated Apple’s sales.

Apple’s return to success was driven by Jobs, but also by the companies’ return to the principles that made it successful: sell well designed technology for the average consumer that works well.  Despite Apple’s hardware routinely being above-market costs, people willingly shell out the cash because they know what the Apple brand stands for.

With Palm introducing three OS lines, it will be a real challenge for the consumer and prosumer to sort out which model they will be most happy using.  Additionally, Palm’s commitment to the latest Web2.0 craze seems to be at odds with what made Palm successful: making reliable, easy-to-use PDAs that work for multiple applications, whether it be for the ordinary consumer or the prosumer/enterprise user market.

Palm’s decision to release three types of smartphones and personal productivity devices seems risky.  The added engineering cost for all three, plus the possibility that each device will fail to completely reach its intended target, may ultimately prove the decision to be unprofitable overall.  But if the risk pays off in the end, we may be on the verge of witnessing another example of a technology company rebirth.  Whatever the case, 2009 will likely be a make-or-break year for the future of Palm.

Filed under: Consumer Web, Enterprise Web, Mobile Web, Product Management