I’ll say it now. Palm’s shareholders and customers should force the company to re-hire Ed Colligan and Donna Dubinsky, letting go of Jon Rubinstein and Elevation Partners as its management team.

A brief history: In the traditional cat and mouse game since the release of the Palm Pre, Palm announced that the Pre could sync with iTunes, but that Cupertino could block that feature at any time. And Apple did break the Pre’s sync capabilities with iTunes in its latest, current release. To one-up Apple, however, today, Palm proudly announces that its webOS 1.1 update that it is pushing out to end-users remedies this problem.

The discussion: Under the management led by Elevation Partners and Rubinstein, Palm has lost its brand characters: innovation, ease of use, and simplicity. While the can sync/can’t sync situation between Apple and Palm is in good fun, the bigger issue here is that Palm is not taking advantage of its most valued prize–it’s intellectual property (IP), which in essence forms its competitive advantage in the marketplace. That competitive advantage, had helped the company grow its PDA business for years, with Palm OS having had a stronghold until Pocket PCs, and later Windows Mobile devices, came along. Today, Palm’s competitive advantage rests in webOS, along with its brand’s hallmark simplicity and ease of use.

Palm simply doesn’t have the capacity to idle resources to re-implement iTunes integration every instance Apple breaks the connection. Rather, it cannot sit on its laurel after proclaiming what a revolutionary OS webOS is. Little by little, competitors like HTC, Google Android, and Microsoft are taking bits and pieces of what makes webOS great and implementing it into their own solutions.

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Examples of such where webOS DNA is present include HTC’s efforts with the Sense UI (currently on Android, though the UI will be ported to Windows Mobile and HTC dumbphones) and the new TouchFLO 3D on the Diamond2. HTC could easily implement greater Google and Facebook integration, add a Twitter widget to the Sense UI, and Windows Mobile’s adoption of capacitive screens will eat away at today’s competitive advantage in technology.

Perhaps Palm’s lack of focus is the direct cause of its complicated management team. Its largest investor, Elevation Partners, is tangled in a confusing smartphone family tree. Bono, from the band U2 and one of the main guys at Elevation, himself is BlackBerry user, who formed a partnership with RIM because Research in Motion would allow the band more input to smartphone designs with BlackBerry; U2′s 360 Tour is also sponsored by BlackBerry. Then there’s Jon Rubinstein, an Apple man who defaulted and helped to herald the Pre. Add Palm to the brand and you get an eclectic mix of three divergent smartphone interests.

The bottom line: As is the case of business, the bottom line is important for any company, and Palm is no exception. Its continued distraction with Apple’s iTunes is not only pulling resources away, but confusing customers. As Rene Ritchie from The iPhone Blog puts it, “But Palm isn’t playing with game pieces, they’re playing with that average user who just wants a reliable sync solution for his or her (or moms!) media.”

In the competitive smartphone market where everyone tries to simplify the smartphone UI to attract other smartphone users and users who may migrate from a dumbphone. As such, users from a dumbphone may not be familiar with what’s going on in the smartphone space, and may rely incorrectly on the Pre’s ability to connect to iTunes, an intellectual property owned by Apple where Palm has no say or control over. Moreover, while pocketnow.com’s readers may know that iTunes sync really means just music, new users who migrate from a dumbphone, as Ritchie states, may not know that their app purchases or movies bought from iTunes with DRM would not work on the Pre, even in spite of Palm’s iTunes hacking. This detracts from the webOS user experience, creates market confusion, and positions Palm in a position of offering poor support.

My recommendations: Now that Elevation Partners knows that it will make some money with Palm (considering investors rallying after the successful Pre launch), I suggest they continue to invest ideas and money into the firm, but hand back management back to long-time Palm CEO Ed Colligan (who had left the company) and Handspring Treo CEO Donna Dubinsky (Handspring was subsequently acquired by Palm and Palm took over the Treo brand).

For whatever people thought of Palm in its glorious PDA days of yore, or even in the Treo and Centro days not too long ago, it was its own proud company with a strong focus on the customer, the product’s ease of use, and the “Palm simplicity” that many long-time PDA users still remember the brand for. With a complicated management team who has vested, divergent interest in Apple and Research in Motion, Palm is less of an inspirational brand and the firm itself is aspiring to be too many things that it is not.

Given Rubinstein’s history of the iPod, the Pre could be seen as an iPhone clone with a keyboard (we’ve already seen way too many Pre-iPhone comparisons on many other blogs), and Bono’s conflict of interest with BlackBerry maker Research in Motion may not be healthy for a young, new Palm. In fact, Bono and U2 had hailed RIM for allowing them more creative influence in the smartphone process for the Canadian manufacturer, a direct competitor with the Pre. Palm has bigger issues at stake here: how to compel developers to create great apps for its platform, considering the SDK, which some developers have found to be limited and weak. Whether we’re a Pre, Treo, or Centro user, we all need a stronger Palm around to force the likes of Google, Microsoft, and Research in Motion to innovate, create, and inspire us with new products.