Palm Promotes Ex-Apple Rubinstein To CEO (PALM, AAPL)
Palm (PALM) chairman Jon Rubinstein, a former Apple (AAPL) executive, will become Palm's CEO. Current Palm CEO Ed Colligan will move to Elevation Partners, the private equity firm that owns a big chunk of Palm.
Context & Ripple Effects
The move completes the arc that began in June 2007, when Bono and Rubinstein laid out plans to shake up Palm and the company sold its 25% stake to Elevation Partners, overhauling the board. Rubinstein joined then as executive chairman; two years on, he formally replaces Ed Colligan, the longtime CEO who had been fronting the Pre effort as recently as February's investor briefing.
Timing matters: Palm has just put the Pre on shelves into a market where Apple is simultaneously shipping the iPhone 3G S with 7.2 Mbps HSPA and refreshing its Mac notebook line. Handing the CEO title to the executive who built the iPod at Apple is Elevation Partners doubling down on its bet — and moving Colligan inside the firm that owns a big chunk of Palm keeps him close to the investment.
First-order effects
- Jon Rubinstein now runs Palm day-to-day as CEO while remaining chairman, putting an ex-Apple hardware executive in charge just weeks after the Pre's launch against the iPhone 3G S.
- Ed Colligan exits the CEO seat for Elevation Partners, aligning Palm's outgoing operator directly with the private equity firm holding its largest stake.
Second-order effects
- With both the chairman-CEO role and the largest shareholder's bench now staffed by people tied to the 2007 restructuring, Elevation tightens operational control of Palm and raises the stakes on the Pre as its turnaround vehicle.
- Palm faces a competitor in Apple operating on an annual product-refresh cadence, forcing the new CEO to accelerate Palm's roadmap or concede the high end of the smartphone market it just re-entered.
Third-order effects
- If the pattern holds, distressed device makers will increasingly recruit executives from the category leader as their turnaround bet, making résumés from Apple the scarce input in smartphone turnarounds.
- Private equity ownership of public consumer-hardware companies — investor-installed leadership, founder operators rotated out — becomes the template for legacy mobile brands trying to survive the iPhone era.
The trend: Private-equity-backed smartphone turnarounds are betting on ex-Apple hardware veterans to lead them against the company those veterans left.