As predicted, Palm is losing ground fast to iPhone and Android handsets like Droid. The handset maker shipped 960,000 smartphones to the stores in the quarter ended Feb. 26 (23% year over increase). However, the number of actual handsets sold dropped by 29% to 408,000.

The company which pioneered the smartphone segment suffered a loss of $22 million. Following the disappointing results, the value of Palm’s shares dropped by nearly 15%. However, Jon Rubinstein – Palm’s CEO, believes that the situation would have been drastically different had Palm gone on sale at Verizon before Motorola Droid. “If we could have launched at Verizon prior to the Droid, I think we would have gotten the attention the Droid got. And since I believe we have a better product, I think we could have even done better”, said Rubinstein.

It is a pity that the original smartphone innovator is struggling to sell a million handsets, while Apple managed to sell in excess of 8 million handsets in the same quarter. The big question is – can Palm reverse their fortunes? The substantial stockpile of Palm handsets already present with various distributors makes a quick recovery unlikely. Only time will tell if Palm can find back their winning ways. But for the sake of consumers, let us hope that they do.