Sprint Nextel Corp. plans to start selling Palm Inc.'s much anticipated new smart phone, the Pre, on June 6 for $200. The device could give Palm a much-needed boost in sales and help Sprint stop the defection of subscribers to other wireless carriers.
The price — which requires a new two-year service and data plan and a $100 mail-in rebate — and the launch date are both close to what industry watchers were expecting.
The Pre, which looks like an iPhone but sports a slide-out keyboard in addition to a touch screen, is seen as Palm's chance of reversing a long slide and taking on newer smart phones like the iPhone and BlackBerry.
In its fiscal third quarter, which ended in late February, Sunnyvale, Calif.-based Palm reported its loss widened as sales of its phones fell 42 percent year over year to 482,000.
Meanwhile, Overland Park, Kan.-based Sprint lost 1.25 million of its valuable contracted subscribers in the first three months of the year, even worse than the drop of 1.1 million in the fourth quarter.
Given their challenges, Collins Stewart analyst Ashok Kumar said the device is a "make or break product" for both companies. Kumar is skeptical that the Pre will be a runaway success because the smart phone market is already so crowded, and said the Pre should be priced lower than the $199 iPhone.
Gartner analyst Ken Dulaney said Palm has "a legitimate shot of resurrecting themselves," but argues that for the Pre to be successful it would have to become the dominant smart phone at Sprint, which he thinks is unlikely.
Oppenheimer analyst Tim Horan sees the Pre as a good move for Sprint, but said the carrier needs to do other things to staunch its drop in subscribers.
"It's a positive small step but the competitors aren't standing still," he said, noting that new smart phones from Nokia Corp. and Motorola Inc. are expected to hit the market in the next six months.
Palm also said Tuesday that it will also start selling a wireless charging dock for the Pre called the Touchstone, along with a special back cover that makes the phone compatible with the dock, for $70.
