Palm's Pre Cell Phone: A Make-or-Break Launch for the Struggling Handset Maker

Strategic Insights -

Palm is set to launch its highly anticipated Pre cell phone nationwide on June 6, a move many see as crucial for the company's survival in the competitive smartphone market. The Pre's success is being closely watched, particularly given the device's $199 price point, which is comparable to Apple's iPhone with AT&T service. Palm's Pre will be sold at various carriers and retail stores, including Sprint Nextel, Best Buy, and Wal-Mart, and uses the new Palm-owned operating system, WebOS, which promises advanced features such as a Web browser, touch-screen interface, and easy access to Internet-based services.

Key Takeaways:

  • The Palm Pre will be sold at multiple carriers and retail stores, including Sprint Nextel, Best Buy, and Wal-Mart, for a price of $199 with a two-year contract, making it comparable to Apple's iPhone with AT&T service.
  • The device uses the new Palm-owned operating system, WebOS, which promises advanced features such as a Web browser, touch-screen interface, and easy access to Internet-based services.
  • Palm badly needs a hit with the Pre, as the company has lost ground to devices such as Apple's iPhone, Research In Motion's BlackBerry, and handsets running Microsoft's Windows Mobile operating system.
  • Analysts are divided on the Pre's potential, with some seeing it as a solid contender and others expressing doubts about its ability to revive the company.
  • Palm's financial situation is precarious, with a loss of 86 cents per share in the third quarter and a 71% decline in sales to $90.6 million.

Statistics:

  • 86 cents per share loss for Palm in the third quarter
  • 71% decline in sales to $90.6 million in the third quarter
  • 72% decline in smartphone sales
  • $199 price point for the Palm Pre, comparable to Apple's iPhone with AT&T service
  • 8 gigabytes of storage for the Palm Pre
  • Wi-Fi wireless networking and global positioning system available on the Palm Pre

Sources:

  • BRIAN DEAGON, "Palm plans to sell Pre cell phone nationwide June 6, a product launch many see as a make-or-break milestone for the struggling handset maker."
  • Aviation Securities analyst Matthew Thornton
  • PCMag.com reviewer Sascha Cohen
  • Avian Securities report by Thornton
  • International Strategy & Investment report by Bill Whyman
  • Forrester Research report by Ian Fogg