How destinies of Motorola & Palm grew apart

Motorola, which had invented cellphones and found great success with the Razr, and Palm, which pioneered the hand-held computer category, watched more nimble competitors lure away consumers with flashier, sleeker and more functional smartphones.

But their paths have now sharply diverged. On Wednesday, Hewlett-Packard, the PC giant, announced it would buy the loss-ridden Palm and use its technology across a range of HP devices. On Thursday, the similarly loss-ridden Motorola, however, announced it made an unexpected profit during its first quarter, beating Wall Street expectations.

The reason for the different outcomes, in a word, may be Android, Google’s operating system for mobile devices. “Motorola did quite well by jumping on Android’s bandwagon,” said Roger Entner, mobile analyst with Nielsen. “Whereas Palm went the route of having their own operating system and launching that with Sprint, right against the iPhone.”

“Last year, we weren’t shipping any smartphones,” Sanjay Jha, Motorola’s co-chief executive, said in an interview. “Our brand is recovering very well.”

For last two years the company has been working to reverse its fortunes by designing a product that catches the attention of consumers. Analysts and industry experts say the company’s efforts now appear to be paying off. Jha said Motorola’s early adoption of Android helped the company streamline its efforts, which contributed to its comeback.

Palm, on the other hand, struggled to sell its small suite of sleek smartphones, the Pre and the Pixi.  “The idea at Palm was that if you take great technology it leads to great sales,” said Philip Cusick, a wireless industry analyst at Macquarie Research. Cusick described the approach as “very Apple-esque.”

Palm was standoffish to tech enthusiasts, and its mass-market advertising, which featured a wan girl spouting New Age philosophy, struck many as peculiar. By joining with a smaller carrier in the UStates, Sprint, to release its first new product, Palm hindered its makeover effort, analysts said. It didn’t help that Palm released the Pre as the same time Apple announced its new iPhone. “It took wind right out of them,” Cusick said. “What could have turned Palm into a household name turned into a massive cash drain,” he said.