John Paczkowski

Recent Posts by John Paczkowski

Good Luck Competing on the iPhone’s Home Turf, Palm

palmhailmary_thumbAfter plunging last week to their lowest level in more than a year, Palm’s shares have come back slightly on news of the company’s distribution deal with AT&T. Investors, it seems, are hoping the deal will revive Palm’s flagging smartphone sales and ease the nasty inventory problem that has developed over the past few months.

But analysts aren’t so sure. In a note to clients this morning, Kaufman Bros. analyst Shaw Wu wondered just how much good the AT&T (T) deal will do for Palm (PALM) given the pricing of its smartphones. The company is selling the Pre Plus and Pixi Plus for $149.99 and $49.99, respectively, with a two-year service agreement and after a $100 mail-in rebate. Hardly a compelling proposition when the prices of competing devices like Apple’s (AAPL) iPhone and Research in Motion’s (RIMM) BlackBerry are significantly lower.

“While we are pleased to see PALM expand its footprint, we are unsure how meaningful the impact will be as we believe AT&T is the most competitive carrier out there being the exclusive partner for iPhone in the U.S,” says Wu. “We believe PALM’s price points are arguably too high when one can get an iPhone 3G for $99 and a BlackBerry for as little as $9.99.”

Exactly. And beyond price, there is the issue of AT&T’s relationship to the iPhone, which has spiked both its subscriber numbers and wireless data revenue since the carrier first began peddling it. Is AT&T is going to put the Pre and Pixi out in front, given what the iPhone has done for the carrier’s financials? Does Palm’s AT&T deal include a commitment to aggressively market and sell its devices? Because it’s going to need one if it’s to compete with the iPhone on its home turf.

As Palm CEO Jon Rubinstein observed on the company’s latest earnings call, launching a pair of new smartphones on a carrier that’s already heavily invested in a hero device–as Verizon (VZ) is with Droid and AT&T is with the iPhone–is no easy task. Said Rubinstein: “If we could have launched at Verizon prior to the Droid, I think we would have gotten the attention the Droid got.”

But you didn’t. And now you’re launching on AT&T after the iPhone, a device with far greater critical mass than Droid. Why will things be any different this time around?

FURTHER READING:

Twitter’s Tanking

December 30, 2013 at 6:49 am PT

2013 Was a Good Year for Chromebooks

December 29, 2013 at 2:12 pm PT

BlackBerry Pulls Latest Twitter for BB10 Update

December 29, 2013 at 5:58 am PT

Apple CEO Tim Cook Made $4.25 Million This Year

December 28, 2013 at 12:05 pm PT

Latest Video

View all videos »

Search »

Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus