A former Apple hardware engineer who oversaw the iPod division, Jon Rubinstein’s new “job [executive chairman] is to restore Palm to its former glory and carve out a nice slice of the smart-phone pie. But to do so, Palm will have to compete with Apple’s iPhone. Launched two years ago, the iPhone has created nothing less than a new way of doing business. By last January, more than 21 million iPhones had been sold; nearly 50,000 applications are now available for download at its online App Store. Rubinstein, an easygoing guy, smiles when we discuss this and points out that the market is large and expanding; Palm doesn’t need to steal any of its competitors’ customers to thrive. The smart-phone race is a marathon, not a sprint,” Josh Quittner reports for TIME Magazine.

“Yet if the Pre stumbles, Palm might never catch up. The industry sets a blistering pace, and Palm is already late to market. But if anything worries the famously secretive Apple (which, it goes almost without saying, declined to comment for this story), it has to be Rubinstein. He wasn’t merely once an Apple insider; he was in the inner circle, a man close to Steve Jobs himself who helped overhaul the engineering processes core to Apple’s turnaround. He worked on the top projects at 1 Infinite Loop and, for a time at least, got to see where Apple was headed,” Quittner reports.

“Then he burned out. Like others on the executive team, he had made a small fortune in Apple stock–$26 million by some accounts–and he didn’t need to work anymore. What he wanted to do, he told Jobs at a meeting in the boss’s office one September day in 2005, was build a house on the beach in Mexico, drink margaritas with his wife and toast the setting sun. Rubinstein told Jobs he wanted out. ‘He goes, ‘Really?” Rubinstein thunders, imitating a man in shock. Then he chuckles,” Quittner reports.

“The meeting wasn’t acrimonious, and he believed the door was open should he ever want to return. Jobs did not beg him to stay, and they worked out a plan for an orderly transition,” Quittner reports.

MacDailyNews Take: Someday we’ll get the whole story, hopefully. That Jobs simply let Rubinstein go without a fuss is quite telling.

Quittner reports, “One day, ‘out of the blue,’ he says, he got a call from Fred Anderson, who had been Apple’s CFO until retiring in 2004… Anderson had had a terrible falling out with Jobs during the Securities and Exchange Commission’s investigation of an options-backdating scandal in 2007. He settled the case without admitting wrongdoing but blamed the CEO for leaving him exposed. Not coincidentally, at about that time, Anderson joined Elevation Partners, a private-equity firm that had invested $325 million to buy a 26% share of Palm. (It now owns 34%.) Thinking that Rubinstein was just what Palm needed to right itself, Anderson introduced him to Ed Colligan, Palm’s CEO. Colligan visited Rubinstein in Mexico and ultimately convinced him that Palm needed him to orchestrate a Jobs-style reinvention.”

Full article here.

MacDailyNews Take: Our headline remains an open question. We continue to believe that there’s more to this story than is being told (see related articles).