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Roger McNamee: Judgment Day

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mcnajudgeYou know the beautiful thing: June 29, 2009, is the two- year anniversary of the first shipment of the iPhone,Elevation Partners (which owns a huge portion of Palm) co-founder Roger McNamee told Bloomberg in March. “Not one of those people will still be using an iPhone a month later.

Yes, that would be today.

So how did McNamee’s claim turn out? Well, let’s put it this way: If there was a foot-in-the-mouth award given every year, no one else would need to apply this year. Hell, it might take the prize for the whole decade. It’s a quote of Ballmer-level proportions.

Before I dive into any kind of analysis, I can say right off the bat that McNamee’s statement is false. Why? Because I bought the original iPhone on June 29, 2007. I am still using an iPhone today.

Something else to think about: Estimates are that Apple sold somewhere between 250,000 to 500,000 iPhones in its first weekend on sale in 2007. The last estimates given for Pre sales was that it sold around 300,000 by the end of June. It’s entirely possible that there haven’t even been as many Pres sold so far as there were iPhones sold during its first weekend. That doesn’t just make McNamee’s claim look bad — it makes it impossible.

I do not have a Palm Pre, but I have used one quite a few times now. It’s a great phone. The hardware isn’t exactly my cup of tea (I don’t like the keyboard), but there is no denying that the webOS software is very solid. Of course, it’s subjective, but I would say the Pre is the second-best smartphone on the market today.

But that’s not what McNamee said. He said, “Not one of those people will still be using an iPhone a month later.” The claim was laughable at the time, but it’s even more laughable now. He was, of course, implying that once people who bought the original iPhone saw the Pre, all of them would switch since their initial 2-year contracts would be up.

The reality has been much different. Not only is it likely that many of the people who originally bought the iPhone are still using one, but many of them have upgraded once or twice to newer models. And of course, there are millions more iPhone customers that have been added since then. Including millions since the launch of the iPhone 3GS, which was launched after the Pre.

iphonepreSpeaking of the Pre’s launch, it took place after McNamee’s claim, and it sold pretty well out of the gate. But Apple announced the iPhone 3GS a few days later, and as expected, it dampened much of the Pre hype. Sales of the Pre remained decent, but not stellar, and have been slowly trailing off ever since.

Contrast that with the iPhone 3GS that sold over a million units in just three days after its launch, and has remained red hot. It’s so hot that Apple has had a hard time keeping it in stock. The Pre, on the other hand, is widely available, according to recent inventory checks.

And while it’s not entirely fair to compare the two platforms by their app stores, the huge difference cannot be overlooked either. The iPhone launched its App Store a year ago, which was a year after the launch of the first iPhone. So there was already an installed user-base, which is one of the reasons why iPhone app downloads completely destroy Pre app downloads.

But at the same time, the iPhone App Store launched with 500 apps, the Pre’s App Catalog has an anemic 32 apps, nearly two months after its launch. The number is so laughably low that when two new apps were launched yesterday, it made headlines — for the fact that two new apps finally launched.

This is of course because Palm only just opened its SDK to the public, the lack of which really hurt its potential. With it out now, the Pre’s app ecosystem should grow much more quickly, but it will likely still be a few months before we really start to notice that.

But McNamee knew all of that when he made that statement, and yet, he still said it.

Now, it’s one thing to tout your own product, but calling out a rival with a comment so asinine, was a poor choice, to say the least. And to Palm’s credit, they knew it too, which is why they sent the SEC a filing with 10 clarifications and corrections about what McNamee said in one interview. Here’s the correction that relates to this:

8. The statement in the second paragraph of the article that “not one” person who bought an Apple, Inc. iPhone on the first shipment date “will still be using an iPhone a month” after the two-year anniversary of that day is an exaggerated prediction of consumer behavior pattern and is withdrawn.

Oh, okay, why don’t we all just make outrageous claims then send the SEC a note to withdraw them? But that’s why we’re here, to hold people’s feet to the fire when they say idiotic things, even if they petition the SEC to withdraw them.

The fact of the matter is that the iPhone remains the hottest smartphone and may be the hottest platform overall on the planet, right now. Apple has sold around 25 million iPhones. Palm has sold something probably south of a half million Pres — it’s a number that Sprint wouldn’t even say during its earnings call. And whatever the number was, it was not enough to stop the service from bleeding customers last quarter.

The Pre, while a nice phone, has a number of things working against it, including Sprint’s smaller network (though I find it to be much better quality-wise than AT&T’s awful network), and the lack of a robust app ecosystem right now. But both of those should change shortly. I already spoke to the app problem, but Verizon has also announced that the Pre will be on its network sometime in early 2010. That will be big, I imagine.

schiller-palm-wwdcBut will it be iPhone-killing big? No, of course not. There is plenty of room for many smartphones on the market, you’d have to imagine that even McNamee knows that. I think his iPhone-envy just got the best of him with such a statement. And that was interesting because it added more fuel to the fire of the Apple/Palm rivalry, which was already an interesting one.

Palm has no shortage of ex-Apple employees now working for it, including newly appointed CEO Jon Rubenstein, who used to head Apple’s iPod and Mac divisions. And now they’re caught up with this cat-and-mouse game with Apple to make iTunes syncing work for the Pre.

The Pre is also the first mobile device since the iPhone to use multi-touch, something which brought out some interesting statements from Apple about protecting their intellectual property. There have been no lawsuits on that front, but we can probably safely assume that Apple looked into it, and probably isn’t too happy that it apparently cannot push for legal action.

Then there was the ad that Sprint made for the Pre, with an eaten apple (which also spoke to the first wave of expiring iPhone contracts). And then there was Apple trash-talking the Pre’s small app store size during its WWDC keynote. “And somebody else. I can’t quite read it. It’s small,” is what Apple’s Phil Schiller said. (The chart he’s referring to is above.)

But Apple can talk for now, it has earned that privilege by running laps around its rivals with its smartphone and App Store. Palm, has not. And they look bad today thanks to McNamee.

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