Apple plays softball with Palm

    By Philip Elmer-DeWitt

    As you may have heard, Apple (AAPL) on Wednesday pulled the plug on a much-hyped feature of the Palm Pre: its ability to sync seamlessly with iTunes.

    On Thursday Palm’s (PALM) shares took a nosedive, falling 7.4% in early trading from Wednesday’s high as the rest of the market was enjoying a midsummer bull run.

    But by the end of the trading day, Palm was back where it started Wednesday, no worse for wear.

    Because, really, for all the fuss that the trade press made about the flap — Google News turned up 159 articles and 39 blog items — was this the best Apple could do?

    Apple COO Tim Cook, who was running the shop while Steve Jobs was on medical leave, has been making threatening noises about Palm ever since his former colleague — and now bitter rival — Jon Rubinstein unveiled the device that many hailed as an iPhone killer.

    “We think competition is good. It makes us all better. And we are ready to suit up and go against anyone,” Cook told analysts on a earnings call in January.

    “However,” he added, his voice rising, “we will not stand for having our IP [intellectual property] ripped off, and we’ll use whatever weapons that we have at our disposal. I don’t know that I can be clearer than that.” (link)

    The tenor of Cook’s remarks, reiterated three months later, led analysts to believe that Apple was getting ready to take Palm to court. Speculation centered on a patent suit over Palm’s use of multi-touch technology that Jobs had insisted was heavily protected by multiple patents and which other iPhone competitors — Google’s (GOOG) Android, for example — have been careful not to use.

    “If faced with legal action,” a Palm spokesperson promptly responded, “we are confident that we have the tools necessary to defend ourselves.”

    Perhaps they do, because the Pre has been selling for six weeks now and the threatened court actions still haven’t materialized.

    Instead we get a flap about iTunes.

    It may not have been wise, as many have suggested, for Palm to make such a fuss about the Pre’s ability to trick iTunes into thinking it was an iPod — something it was able to do because team Palm is chock-a-block with former Apple engineers.

    After all, Apple could rewrite its iTunes software at will — and it did. Witness iTunes 8.2.1, released Wednesday, which as an Apple spokesperson helpfully pointed out, “disables devices falsely pretending to be iPods, including the Palm Pre.”

    This is hardly a death blow for Palm, however. Music syncing was not the only thing the Pre’s software does well, and there are any number of third party programs that offer workarounds (the New York Times today recommends dazzboard; Wired.com likes Salling Media Sync).

    Meanwhile, we’re still waiting for Apple to bring on the heat. If Tim Cook has stronger stuff in his arsenal — as he has suggested twice now — we haven’t seen it yet.