Not too long ago, Circuit City went bankrupt and out of business. Now many are speculating that by the end of next year, Palm will face the same fate and the brand will be completely gone – vanished – by the end of 2010. I happen to severely disagree but we’ll get to that in a minute.

Everyone in the world knew that Palm needed to hit a homerun with a new device and operating system. When they announced the Palm Pre and webOS, the entire world seemed to gush and it was nearly impossible to find a detractor. Take for example Tim Beyers of The Motley Fool:

• Before the Pre was announced he wrote an article indicating Palm must act IMMEDIATLY or go the way of the dinosaurs
• After the Pre was announced he raved about the company saying, “Impressed? You should be.“
• A couple weeks ago he wrote an article suggesting the Palm Pre was DOA.

While the verbage is harsh, Beyers main complaint is a legitamate one: in a troubling economic time Palm could NOT afford to wait long to release the Pre when more worthy Apple, Android and BlackBerry products would find their way to market. Combine that with the fact that the device is an exclusive Sprint offering and things don’t look good for Palm.

Last week, 24/7WallSt posted an article naming 12 brands they believe will reach their demise by the end of 2010. Palm came in at number 10:

1. Avis/Budget
2. Borders
3. Crocs
4. Saturn
5. Esquire Magazine
6. Gap
7. Architectural Digest Magazine
8. The Chrysler Brand
9. Eddie Bauer
10. Palm
11. AIG
12. Any company in the travel industry is at risk

So what did they have to say about Palm?

Palm (PALM) has been at death’s door for some time. It prospects have improved recently and the company has one last chance to become viable when it launches its new “Pre” product. Recent research shows that almost no one who owns an Apple (AAPL) iPhone or RIM (RIMM) Blackberry will switch to the new smartphone, so Palm will have to essentially expand the market to get share for its new device during a recession.  The “Pre” will also be sold exclusively though Sprint (S), the No.3 cellular carrier in the US which has been losing subscribers consistently for more than two years. The launch of the “Pre” is a disaster in the making. Palm’s results for the quarter that ended on February 27th were awful, failing to meet Wall St’s modest expectations. Palm sold only 482,000 handsets for the period, down 42% from the same quarter the year before. Revenue dropped from $312 million to $91 million, and Palm lost $95 million. Palm brought in just over $100 million with the help of its largest shareholder, Elevation Partners, in a recent financing. The bottom line is that Palm has no chance of getting an even modest part of the smartphone market in a severe economic downturn since it competes with two of the premier technology companies in the world—Apple and RIM. Palm won’t be in business in a year.

If you don’t feel like reading that huge paragraph allow me summarize it: Nobody who owns an iPhone or BlackBerry is going to switch to Palm and there isn’t enough business remaining to keep them afloat, especially considering nobody wants Sprint.

I wholeheartedly disagree. Palm’s webOS looks amazing and the Pre will put the company amongst the iPhone/BlackBerry/Android crowd. Right now that is a COVETED position to be in. The Pre will sell just fine as long as it launches before the end of June and hopefully, more webOS handsets are already in the works. If Palm DOES face financial trouble don’t you think some investors, like Elevation Partners, will bail them out knowing that the future is in mobile and webOS has huge potential to compete?

In the worst case scenario a company like Dell will purchase Palm in which case I think the brand name will live on because there is such a rich history and brand equity there. Dell needs an “in” to the market and NOBODY associates the Dell name with mobile phones. Palm is known for mobile and their brand name in and of itself is a huge value. Palm will exist in 2009, 2010 and beyond and it will all be thanks to webOS.

Feel free to disagree… I’ll be incredibly happy to say “told ya so” when Palm proves you wrong. In any case, 1st ammendment box is below…