Is Verizon Deal Enough to Turn Palm Around?

Palm’snew distribution deal with Verizon is proving a boon for the smartphone company, although less of one than you’d think, given the carrier’s size and reach. According to a trio of analyst notes released this week, Palm’s Pre Plus and Pixi Plus haven’t exactly inspired a run on Verizon stores.

Piper Jaffray analyst T. Michael Walkley says he has been “slightly disappointed” with initial Palm (PALM) sales at Verizon (VZ), observing that sell-through so far has been at best “modest.”

RBC analyst Mike Abramsky is of a similar opinion. “Despite an initial first day ‘pop,’ Palm’s soft launch sell-through at Verizon was modest (ex 1-2/store/day),” he wrote in a research note to clients this week.

“However,” Abramsky elaborated, “as of Feb 9, checks show momentum steadily improving (now 3-4/store/day)….Broad awareness continues to be Palm’s challenge, with many unaware of Palm despite the marketing campaign. Some Verizon reps remain unfamiliar with webOS.”

Deutsche Bank analyst Jonathan Goldberg has also been unimpressed by initial sales of the Pre Plus and Pixi Plus at Verizon. He, like Abramsky, contends that more aggressive promotion from both Verizon and Palm is what’s needed to bolster demand.

“We have conducted a phone survey of 210 Verizon outlets in 38 states to gauge Palm and smartphone trends,” Goldberg explained in a client note issued this morning. “We have found that Verizon has yet to fully engage in promoting Palm products, however we did see a clear improvement as the survey progressed, indicative of ongoing training efforts.”

So Palm will be well-served with Verizon as a partner, but its challenge, as always, is one of awareness — particularly with expectations for a Verizon iPhone running high. Once it overcomes that, increasing carrier momentum should follow.