Now it's a household word. But it's not necessarily used in a way that makes the executives happy. Most often it's heard thus: "Palm's shares today took a hit in the stock market." Yes, the word is "Palm" and it's just about made its way into the lexicon next to Xerox and Kleenex, and it did it without an "x" in the name. It is now such a common part of daily business life that the brand name is becoming generic, and even Handspring, Sony, HandEra, and Pocket PC machines are generically referred to as "Palms" or "Palm Pilots."

So why is it that Palm stock keeps going down? Many, like Xerox, would maintain that it's this "misuse" of the name that causes this downturn. They've even run ads encouraging folks to stop using the term "xerox" generically in place of "photocopy." This was shortsighted, of course, a way of blaming the public for Xerox's failure to turn brilliant ideas into successful products. But that's common knowledge. What's Palm's problem?

I would say that it has to do with pre-announcing product, plain and simple. In this industry, we in the press depend on vendors to give us an early look at products so we have time to write about them and get the news out in print. We sign and honor non-disclosure agreements for the privilege. Palm has mostly honored this and kept us in the loop on new products so that when the product hits the shelves we have a story ready to show you. It's appreciated, very deeply. But leaks about these products have been impossible to prevent. If it's not some unscrupulous minor journalist leaking, it's a major publication letting a sister magazine get a look. Lately, it seems these leaks from the press have been tempered. Even the scoop-addicted c|net has been somewhat tamed; but when something gets out on the Net, who can blame them for picking up the story? Now the leaks come from the vendors and retailers, who are given an even earlier look than are we in the press, since the manufacturers have to sell it to them before they'll stock and sell it to you.

Handspring's Visor Edge, for example, wasn't shown to anyone in the press until the day of its announcement and availability, yet there were still leaks all over the Net, in this case from an online retailer who put the product on their web page early.

As I've said in the past, this is a nice problem to have. But Handspring has offered that leaks and pre-announcements hurt sales of their other products, because people would rather wait to see the rumored product before they buy the handheld they intend to keep for at least the next year.

Well, I think we've seen this concept proven to be true. Since the early pre-announcement of the Palm m500 series, one week after Handspring's Visor Edge announcement, the market for new Palms has fallen and fallen. Palm had been playing catch-up to meet extreme demand for their product, but they were soon faced with a glut. This glut actually started before their pre-announcement on March 19, but you have to remember that there was a pre-pre-announcement on October 31, 2000, by none other than Carl Yankowski, Palm's CEO. He appeared on the On24 Financial Network with news of a new Palm Vx with a color screen and an SD card. CEOs of public companies have to do that stuff to keep investors hopeful, so I'm not really criticizing, but I do offer it as an explanation of what's going on.

Palm faces quite a challenge. They've long succeeded by introducing evolutionary products rather than revolutionary, but now they're playing in a field where their own licensees are taking significant market share from their biggest money maker, the hardware division. So far their strategy has been unclear. On one hand I hear them praise their licensees, like Handspring, for coming out with great innovations in the product line. On the other, I've observed that every time Handspring is about to introduce a new productÑwhich they almost invariably do on a Monday or TuesdayÑsome part of Palm pre-announces a similar product the previous Friday, one that's usually not ready to ship. That certainly doesn't appear to be a friendly gesture. Business is business, and it's clearly difficult to license your product to people who are eating away at your market share without shouting, "Me too!"

This issue's Palm OS section is almost all about new hardware. The revolutionary HandEra 330, the Sony CLIE PEG-N710C, the Palm m500 series, and the Kyocera QCP-6035 Smartphone: these are the answers to the query I pose. It is because of these new products that Palm's stock is down, and the fact that most of them were announced long before they shipped. Handspring apparently has already learned the lesson the others are just now getting.

While many facets of this New Economy have been proven to be very like the Old Economy, one thing has changed. News about new products moves quickly, and sales respond accordingly. That's true of computer sales as well as stock sales.

Palm is not the only one to pre-announce product this year. Both Sony and HandEra announced their products well before they shipped. It's not an uncommon practice, but in a market like Palm's, which was raised and nurtured on the milk of the Internet, the effects can be devastating. Surely both Sony and HandEra's announcements hurt Palm's sales of the m500/505 as much as Palm's announcement hurt sales of Handspring's Visor Edge.

So there you have it. That's why Palm's inventory is so high and its stock price so low. It's not because there's anything wrong with their product, nor because their future looks bleak. Their future is actually quite bright, especially if you consider the product Carl Yankowski waved in the air at Wave 2001 this year: the new i700. It's the Palm 7x's successor and he says it will compete well with RIM's line of two-way pagers because it will be on all the time, waiting to receive info. Has it been officially announced yet? No. I can't get any information on it, but strangely I know a lot more than I should, even what it looks like. How can I take the PR people seriously when they have me sign an NDA for a product that their boss has already revealed? Sigh. They're operating in a new environment with a new strategy without updating their old policy toward the press.

On one level, I understand. They face a tough dilemma trying to impress shareholders with new product while keeping customers interested in existing product. Palm especially takes it on the chin because they're the industry leader. I'm hopeful that the new peripheral and expansion system being introduced with the m500 line, which will be included in Palm's other products, will turn things around in the long run. From a product standpoint, Palm sits in a strong position. Their "household name" status should carry them through this tough, tech-fickle stock market to profitability in the near future.

Shawn Barnett can be reached via email at sab@pencomputing.com