Palm Sets Stage for Smartphone Smackdown

Device maker Palm and wireless carrier Sprint announced on Tuesday that the new Palm Pre handset will be made available on June 6 for US$199 after a $100 mail-in rebate.

Much has been expected from the Pre ever since it first surfaced in January. Both Palm and Sprint are in need of a hit — the former’s sales have experienced significant slowdowns in recent quarters, and the latter continues to lose valuable wireless subscribers.

Interestingly, the June 6 release date falls just two days before the Apple Worldwide Developers Conference (WWDC) kicks off in San Francisco. Is the timing a savvy ploy? Or is Sprint skating way too close to the edge?

Will the Pre-Sprint combination help two companies that are lagging behind the competition? And will Palm remain with Sprint, or seek to play with someone else down the road?

Taking a Leaf Out of Apple’s Book

The timing of the Pre’s launch could be an attempt to ride on the buzz surrounding Apple’s WWDC. After all, Jon Rubinstein, Palm’s executive chairman, used to be Apple’s head of hardware engineering.

Rubinstein, who focuses on driving innovation in mobile products at Palm, was involved in conceiving the iPod and led the rapid rollout of the iMac in 1998 during his time at Apple, which he joined in 1997.

Rubinstein’s involvement is clearly evident in the launch of the Pre, according to Yankee Group analyst Carl Howe.

“I was down at Sprint’s offices in Kansas City, and I never once got to touch the Pre,” he told the E-Commerce Times. “It’s just like when Apple launched the iPhone, and it was in a glass case. You have to remember, it’s an ex-Apple guy that’s selling the Pre.”

However, the timing of the launch may be driven more by necessity than by smart marketing.

“Palm has no choice,” said IDC analyst Ryan Reith.

“It’s risky if they do launch so close to the conference and risky if they don’t,” he told the E-Commerce Times. “[Palm] could lose customers to Apple when the conference kicks off.”

The Price Is Right

The Palm Pre will be offered at $199.99 with a two-year agreement after a $100 mail-in rebate. The device will run on Sprint’s 3G network.

“They got the price right,” IDC’s Reith said. “There’s no place in the market for a device coming in above $200.”

As for rumors that Apple will launch less-expensive versions of the iPhone: “What Apple will launch remains to be seen,” Reith said.

Standing Out From the Crowd

The Pre strongly leverages social networking and enables multitasking, two features that place it above the competition, in Reith’s opinion.

Its Synergy feature links contact information from various sources into one view. It also can layer calendars into a single view and let users see all conversations with the same person in a chat-style view, regardless of the messaging technology used.

Palm’s new webOS software platform, which will debut with the Pre, lets users move between multiple activities such as text messaging, email and Web search. The Pre’s universal search feature speeds up the task of finding information.

“The big thing is multitasking, and they’ve done a good job of overall integration,” Reith said. “The Pre brings to the table some differentiation from competitive devices.”

The Competition

A host of new smartphones — including the iPhone, several new Android devices, and devices running Microsoft Windows Mobile 6.5 — will likely be launched before the end of the year. Will the Pre be able to hold its own?

It might, according to Yankee Group’s Howe. “The Pre’s one of the few smartphones that can give the iPhone a run for its money,” Howe said. “They’re calling it a ‘worthy hero’ device — but we’ll have to wait and see.”

However, a new hero may also emerge when a new iPhone is launched. Apple is expected to soon show off new hardware, as well as a new version of the iPhone’s operating system.

Therein lies a possible Pre weakness — that, for all its sex and sizzle, it doesn’t have the soul-grabbing allure of the iPhone.

“What I don’t see is the Apple effect, where people will line up in long queues on a Saturday morning to get the device and switch from their carrier to Sprint,” Reith said.

A Short-Lived Romance?

Whether or not the Pre can help Sprint pull in new customers may soon be moot.

“Sprint does not have exclusivity with the Pre,” IDC’s Reith pointed out. “I expect that within the first year, we’ll see another device with webOS — or the Pre itself — on another carrier.”

Bell Canada, according to Reith, wants to launch the Pre in that country before the end of the year, and Palm may soon begin selling the device in Europe.

Neither Sprint nor Palm responded to requests for comment by press time.

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