Pre Buzz Generates Some Modest Swarms at Launch

It applies to sports and smartphones: If you're an underdog, you will always be compared to the reigning champs until you knock them off their pedestal. The mission, then, for Palm (Nasdaq: PALM) during Saturday's retail launch of its Pre smartphone was relatively simple: Get as close as possible to an iPhone-style score, and don't commit any turnovers.

Given those parameters, Palm appears to have gained some yardage with a limited success . It's hard to expect iPhone-like sales numbers given Apple's (Nasdaq: AAPL) two-year head start, the current economic climate, and none other than Sprint (NYSE: S) CEO Dan Hesse himself claiming limited Pre supplies were on hand.

However, lines were seen snaking out of Sprint stores in some major cities, and sellouts were reported. Also, technology media reviews of Palm's new webOS operating system, which debuted on the Pre, have been mostly positive -- which is key, since Palm reportedly has big plans to put the OS on phones sold by other carriers.

In fact, the Pre is integral to Palm's efforts to reclaim the frontrunner status it enjoyed in the late 1990s with personal digital assistants and the Treo, a PDA/phone hybrid that could be viewed as the granddaddy of today's feature-rich smartphones. The Pre is also one of several devices to come out over the next few months that will carry the pressure-packed tag of "potential iPhone killer."

However, Apple goes on offense this week with its annual Worldwide Developers Conference. So how did Palm do with its short window of opportunity?

Measuring by Apple Standards

"Palm did a good job whipping up a frenzy," independent mobile phone analyst Jeff Kagan told the E-Commerce Times. "We tend to measure everything by Apple and the iPhone. These are devices that are capturing the imagination, and Palm has not been able to keep up. This was Palm's last shot. Were they going to come out with a device that was going to save them? We want to see multiple competitors to the iPhone to keep prices low and innovation high. Palm has been successful at that [with the Pre] so far."

However, Palm and Sprint have already had to issue one update to webOS based on user feedback over the weekend, Kagan noted. "Was it a good operating system? Yes. The customer likes it, but are customers scratching their heads trying to figure out how to use it? Yes. It takes a while to get up to speed with these things."

That's to be expected with any new major device. It may also explain why Sprint and Palm didn't appear to be all that worried about the limited supply issue; it's easier to fix software bugs and maintain the OS when you don't have to update a lot of smartphones, Kagan said. Now, the companies can do their research and figure out who lined up to buy the Pre.

"It wasn't an overwhelming number of customers that lined up at stores like Apple. While it's the first really good answer to Apple's iPhone, it doesn't really target Apple," Kagan said. "The customers that were there are customers that were interested in Palm devices. Now, the question is, after they get through this first wave of people who wanted the new Palm, are there going to be enough customers to continue to let this grow?"

Thumbs Up for WebOS

The limited supply issue, which may have caused early sellouts in some metropolitan areas, didn't impress IDC analyst Ramon Llamas. Check back with him after the first quarter or two of sales, he told the E-Commerce Times. "You'll see teething problems, shortages of devices -- but they're going to be there, and the folks who really want one are going to be able to find one."

Reports of limited applications available for the Pre also don't concern Llamas. "There's not as many as compared to what you see on the App Store or BlackBerry App World -- I'll give you that. I think some people who bought it for apps are going to see a certain paucity from the get-go, but in time this is going to come around. Programming apps for the webOS platform is not that bad. [Developers] are looking to get stuff out there."

WebOS gets a positive review from Llamas for ease of use, which will go a long way toward determining whether the Palm Pre and other phones using the operating system will appeal to the iPhone consumer-focused user, or a business customer who may be waiting to see what Research In Motion's (Nasdaq: RIMM) new BlackBerry models will look like later in the year.

"This kind of operating system is going to give other smartphone companies a run for their money," Llamas said. "It's so intuitive. Palm is hitting on all cylinders right now, and it may help them reach a mainstream base. Some people are comparing the Pre to the iPhone because of the touchscreen, but BlackBerry's main thing is corporate email. The value proposition of WebOS is immediate connectivity to ... whoever you want at any given time, via texting, email or IM. I think that says a lot as to what Palm can do, and what Palm is seeking for its devices to do."