Analysis: Can Bono, With Friends from Apple, Bring Sexy Back to Palm?

Authored by Jay Baage on June 4, 2007 - 9:41am.

The Venture Capital firm Elevation Partners, which has U2's singer Bono as one of five founders, buys 25 percent of wireless device maker Palm. The recapitalization deal also brings fresh management talent to the company - mostly from Apple.

As part of the deal that follows months of speculation, former Apple senior vice president Jon Rubinstein will become executive chairman at Palm. At Apple, Rubinstein was a key executive in the development of the company's popular iPod digital music player as well as the company's line of iMac computers. Moreover, Fred Anderson, former CFO of Apple and a managing director at Elevation, will also join Palm's board of directors, as well as Elevation co-founder Roger McNamee.

So, as we approach Apple's much-anticipated iPhone launch on June 29, investors are not sitting back any longer waiting to see if Palm can update its product line to win over more customers. Elevation believes that smartphones will soon hit a limit on how small and thin they can be without sacrificing functionality. So the advantage in the future will come from the software side.

"If the devices get any smaller they will be unusable," McNamee of Elevation said during the call. "Palm will close that gap, we believe, relatively soon. At which point, we think the game is all about software, and we think software is the place where this company truly excels."

Interesting.

Elevation, which was formed in 2005 and except for Bono boasts the membership of several Silicon Valley heavyweights, are no fools. While Palm faces a number of challenges - intense competition in its phone business, a well known decline in its old handheld business and the lackluster response to the new product - Bono and friends from Apple might be able to blow some much needed "sexiness" into the brand (although I don't see Justin Timberlake or Paris Hilton switching to Palm anytime soon).

Joakim Baage

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