In a research note issued Monday, Jesup and Lamont analyst Kevin Dede says as much, arguing that the company’s shares are overvalued, particularly in light of Pre returns.

“We stood just as the Street now stands, completely enamored with Palm’s highly innovative new device; however, our checks now lead us to believe that while initial sales could almost be categorized as ‘gangbusters’ and perhaps above initial assumptions, we think there are engineering complications that are driving a higher level of returned devices than otherwise expected.

“From a hardware perspective,” Dede continues, “the Pre includes the features expected in a cutting-edge smartphone, including a large touch screen, one of the most powerful processors designed for a handset, and a slide-out keyboard; we understand that a great many returns are on account of an unsatisfactory experience with the keyboard operation and dead pixels in the screen. Fixing these issues shouldn’t pose a problem, but we think the timing risk and severity should be reflected in the shares.”

Dede notes that his impromptu survey of local retail outlets–Sprint (S), Best Buy (BBY) and Radio Shack–revealed that about one in three devices is being returned. He cites, as well, a survey on Pre Central that suggests roughly 40 percent of initial Pre sales are exchanged.

Now, to be fair, this is anecdotal evidence at best. The Pre Central survey, which at present has only 615 respondents, is hardly statistically relevant. That said, Pre Central is a top Pre fan site, and Palm’s own forum has quite a few complaints, as does SprintUsers. So clearly, something’s going on here.

Reached for comment on the issue, Palm had this to say: “We think the Palm Pre is the best product we’ve ever shipped. While we haven’t seen anything out of the ordinary we will continue to closely monitor both Palm and Sprint customer service channels.”

Despite concerns about the Pre’s build quality and Dede’s contention that the company’s stock is overvalued, the analyst sees good things ahead for Palm. “In light of the overwhelming evidence supporting continued growth of converged devices, we believe Palm addresses the most enchanting segment of the mobile device market and should experience at least market growth over the longer term.

“Shorter term is obviously more interesting, and we believe Palm’s technology positions it to gain share at the expense of those companies offering less attractive, less functional devices,” Dede adds, concluding, “The competitive technology race boils down to ease of use across an increasingly complex technical environment.”

UPDATE: Concerned that its survey has been taken out of context, Pre Central is running another poll on Pre build quality, this one on its blog, rather than its forums. And while it’s no more statistically relevant than the original, it’s worth noting. Because with more than twice the number of respondents, it shows just 18 percent of initial Pre sales being exchanged.

In a research note issued Monday, Jesup and Lamont analyst Kevin Dede says as much, arguing that the company’s shares are overvalued, particularly in light of Pre returns.

“We stood just as the Street now stands, completely enamored with Palm’s highly innovative new device; however, our checks now lead us to believe that while initial sales could almost be categorized as ‘gangbusters’ and perhaps above initial assumptions, we think there are engineering complications that are driving a higher level of returned devices than otherwise expected.

“From a hardware perspective,” Dede continues, “the Pre includes the features expected in a cutting-edge smartphone, including a large touch screen, one of the most powerful processors designed for a handset, and a slide-out keyboard; we understand that a great many returns are on account of an unsatisfactory experience with the keyboard operation and dead pixels in the screen. Fixing these issues shouldn’t pose a problem, but we think the timing risk and severity should be reflected in the shares.”

Dede notes that his impromptu survey of local retail outlets–Sprint (S), Best Buy (BBY) and Radio Shack–revealed that about one in three devices is being returned. He cites, as well, a survey on Pre Central that suggests roughly 40 percent of initial Pre sales are exchanged.

Now, to be fair, this is anecdotal evidence at best. The Pre Central survey, which at present has only 615 respondents, is hardly statistically relevant. That said, Pre Central is a top Pre fan site, and Palm’s own forum has quite a few complaints, as does SprintUsers. So clearly, something’s going on here.

Reached for comment on the issue, Palm had this to say: “We think the Palm Pre is the best product we’ve ever shipped. While we haven’t seen anything out of the ordinary we will continue to closely monitor both Palm and Sprint customer service channels.”

Despite concerns about the Pre’s build quality and Dede’s contention that the company’s stock is overvalued, the analyst sees good things ahead for Palm. “In light of the overwhelming evidence supporting continued growth of converged devices, we believe Palm addresses the most enchanting segment of the mobile device market and should experience at least market growth over the longer term.

“Shorter term is obviously more interesting, and we believe Palm’s technology positions it to gain share at the expense of those companies offering less attractive, less functional devices,” Dede adds, concluding, “The competitive technology race boils down to ease of use across an increasingly complex technical environment.”

UPDATE: Concerned that its survey has been taken out of context, Pre Central is running another poll on Pre build quality, this one on its blog, rather than its forums. And while it’s no more statistically relevant than the original, it’s worth noting. Because with more than twice the number of respondents, it shows just 18 percent of initial Pre sales being exchanged.

“If (the Eee PC from) Asus starts to do well, we are all in trouble. That’s just a race to the bottom.”

– Mike Abary, senior vice president of Sony’s IT product division, February, 2008

If the netbook market is a race to the bottom, then Sony is bringing up the rear. Not a year after Sony execs disparaged netbooks as undeserving of its premium brand attention, the company announced its token entry into the market: the Vaio W.

Outfitted with a 10-inch screen, an Intel (INTC) Atom processor, 1GB of memory, a 160GB hard disk drive and Windows XP, the machine prices out at $630 in Japan, $499 in the U.S. That’s quite a bit more expensive than rival netbooks. Which is odd since the market for these machines is fairly price-sensitive. Still, Sony (SNE) feels the W is good value for the money, given its design, cheery color palette (white, brown, pink!) and screen resolution–at 1366 by 768 pixels, the W’s display is clearly better than that of its rivals.

Said Vaio chief Nicolas Barendson, “We believe that this screen resolution and design offers our customers a better experience, and that it will be popular with both newcomers to the netbook market looking for a quality portable PC at a netbook price point, and customers wanting to improve their existing netbook experience to date by upgrading their screens.”

Sony’s announcement leaves Apple (AAPL) as the lone major computer manufacturer without a netbook offering, a designation it’s likely to keep for the foreseeable future, according to company execs. “When I look at netbooks, I see cramped keyboards, terrible software, junky hardware, very small screens,” COO Tim Cook said back in April, noting that it’s “a stretch” to call a netbook a personal computer. “It’s just not a good consumer experience and not something we would put the Mac brand on…it’s not a space as it exists today that we are interested in, nor do we believe that customers in the long term would be interested in. It’s a segment we would choose not to play in.”

But keeping those types of digital-photo frames up-to-date with new pictures demands more technical skill than many parents and grandparents are likely to have. It requires, for example, rudimentary knowledge of how to configure a home Wi-Fi network or shuttle storage cards between a frame and a digital camera. Still, digital frames are a great way to keep generations in touch with, say, a far-flung child’s latest ballet recital or a football game.

Just in time for the holidays, the wireless carrier T-Mobile is selling a digital-photo frame that makes it easy to set up and to keep fresh. While I found the Cameo excels in its simplicity, it comes with a number of annoying drawbacks and a pricing model that will limit its appeal. It sells for a reasonable $99.99 in T-Mobile stores, but carries a hefty $9.99 monthly fee.

Still, Cameo is an exciting first edition of a product.

First, its strengths. The picture frame is as easy to operate as a cellphone, containing some of the same technical innards of a wireless handset. And each Cameo has a unique phone number, just like a cellphone, that lets anyone who knows the number to “dial” it up — sending messages containing digital photographs instead of voice calls.

Setting up Cameo is as easy as taking it out of a box, screwing a stick into the back to prop up the frame and plugging it into an electrical outlet. The Cameo has a seven-inch color display and one of the more attractive borders I’ve seen on a digital photo frame: imitation black leather with white stitching.

Users themselves can manually load images onto the frame from a PC by connecting it through a USB cable or by inserting a miniature storage card from a digital camera.

Cameo can receive pictures wirelessly two ways. The owner of the frame hands out the Cameo’s phone number to friends and family members, who then send pictures to the frame that were taken with the cameras standard on most modern cellphones. This method uses MMS, or multimedia messaging service, a communications standard normally used to share pictures and other media between cellphones.

Cameo owners also can give out an email address for their picture frames that is based on their Cameo’s phone number, allowing people to email images that they’ve downloaded to their computers from digital cameras.

The first time the frame receives a picture from an email address or phone number, Cameo asks the frame owner to push a button on the back of the frame to place the sender on an approved list. After that, all images from the approved source appear automatically on the frame — a method that at least keeps random people’s photos from popping up in grandma’s living room.

There’s a wonderful unpredictability to how Cameo works. Imagine all of the kids and grandkids in a sprawling family room in different locations being able to send snapshots to each other. This is possible now with photo-sharing sites like Flickr, but those typically require going to a Web site. Images on a Cameo just show up without warning on your kitchen countertop, living room or office desk.

I handed out my Cameo number to some colleagues and was delighted when their cameraphone pictures began trickling into my frame, including a shot of the New York neighborhood in which one of them lives, and an image of another colleague ice skating.

The Cameo’s screen, featuring 720×480 pixels, isn’t the highest-resolution digital photo frame on the market, but the pictures looked fine to me. You can do a slide show for any number of images, chose a fade-out or other transition, change the order of the photos and alter the display speed — holding a single image for up to an hour.

Unfortunately, the frame has a skimpy 64 megabytes of memory, and storage capacity isn’t expandable. There is enough room for only about 200 photos at maximum size. Once it’s full, you have to make room by manually deleting photos.

Another problem is that the frame currently is available only to existing T-Mobile cellular subscribers.

By far, the biggest turnoff is the monthly fee for the cellular service that delivers the pictures to the frame. There’s no limit on how many pictures can be sent to a Cameo under T-Mobile’s cellular plan, but $120 a year is a steep price.

The carrier says it will consider other pricing options in the future. Until it does, it’s going to be tough for most people to buy the Cameo, even for a beloved family member.

Walt Mossberg is on vacation.

Write to Nick Wingfield at nick.wingfield@wsj.com

But to the style-conscious set, the Flip looked like a clunky Fisher-Price toy — especially when compared with a sleek, new iPod or more-sophisticated digital cameras — and was too thick to comfortably slip into a pocket. Last fall, Pure Digital introduced an enhanced version: the Flip Video Ultra, but its biggest aesthetic difference was new orange, pink and green colors.

Today, the company will begin sales of its $180 Flip Video Mino (pronounced “minnow”), the hippest offering yet from Pure Digital. This 60-minute Flip includes many firsts for the company: rechargeable batteries; touch-sensitive buttons rather than old-school, push-down buttons; and a thinner build that measures 40% smaller, overall. The Flip Mino is also the first one in the family to enable publishing to MySpace (NWS); prior software limited Web-site sharing to YouTube (GOOG) and AOL (TWX) Video.

I’ve been using a glossy, black Flip Mino (it also comes in white) for the past two weeks and it looks much cooler than older models. Its newly positioned USB adapter pops up from the top of the camera like something from a Swiss Army Knife. The Mino offers features such as the ability to lock the delete button, so no one accidentally deletes your videos, and mute all camera sounds, so as to record silently during quiet moments like wedding ceremonies or speeches.

I brought it along with me almost everywhere I went because of its small size and light weight, even fitting it into a thin clutch purse with a cellphone and BlackBerry (RIMM). I used the Mino in various situations ranging from bright, scenic outdoor settings to indoors while eating dinner in a candle-lit restaurant. Overall, I was pleased with the sound and picture quality of the Mino, and I found its built-in software, which automatically starts when the camera plugs into your Mac (AAPL) or Windows (MSFT) PC, to be a pleasure to use.

Today, Pure Digital Technologies introduced its $180 Flip Video Mino, a thinner, more stylish version of its point-and-shoot camcorder.

It took just a few minutes to trim excess footage from my videos before saving them to my computer or sharing them with friends and family. Another way to share videos from the Flip Mino is via Pure Digital’s server, which sends emails with embedded video links, saving upload and download time on both ends. Though I didn’t publish any of my videos on a public Web site, AOL, MySpace and YouTube were just one step away.

The Flip Mino’s touch buttons, while stylish, were difficult to use at first. I missed the tactile feel of physical buttons as I tried to hold this small video camera and press the zoom buttons using just one hand. The new, touch-sensitive buttons weren’t as satisfying and stable to use, and I pressed them accidentally more than a few times. For instance, the Zoom Out button is directly below Record, making it easy to mistakenly touch it. After about a week of using the Mino, I grew more accustomed to using these new touch buttons, but it shouldn’t take so long to make the adjustment.

Just looking at the Flip Mino’s fresh new exterior makes it hard not to think about the things that this redesigned camcorder is still lacking, like a larger viewing screen (the Mino screen is 1.5 inches, no larger than that of the Flip Ultra), high definition video and wireless sharing capability. These features would likely raise the price and/or tax the battery, and many users of the Flip flock to it for its low price and simplicity. Still, Pure Digital says that it will offer HD video and a larger screen on a product within a year, and is looking into features that might include wireless transferring.

I grew fond of the Mino’s rechargeable battery. Whenever I plugged this gadget into my computer to transfer videos, my Mino charged up via USB without me having to think about it. A full charge lasts four hours and recharging a dead battery takes about three hours.

Pure Digital says that the sound quality and lighting are improved in this model. Like previous models, this Flip records in 640×480 pixels at 30 frames per second.

The Mino didn’t have a problem with lighting in most situations; indeed it did a nice job of capturing images of my family sitting around a table in a restaurant with little more than candlelight to brighten the picture. It doesn’t use a flash or a built-in light, but instead uses automatic sensors to adjust to various levels of light.

This svelte camcorder seemed to handle noise more evenly than I remembered in prior Flip models. It didn’t make my voice sound unbearably louder than everyone else’s, even though I was closest to the camera’s microphone, yet it managed to detect voices across the room. I did have some trouble on a windy day: While recording a quick video of a golf course in San Diego, wind audibly muffled my voice during a few moments in the video.

Along with the delete-lock and sounds-off settings, this Mino has a few other tricks up its sleeve. Each of the touch-sensitive buttons is designed to glow only when usable, so as to better help people who might not know which buttons to press while using this camcorder. For example, only the zoom buttons glow while recording since the other buttons (volume, play/pause and delete) can’t function in this setting.

Shortcuts built into each button provide more functions: Holding the play/pause button down will set the playback mode to play all videos on the Mino; holding the seek ahead or seek back buttons while watching a video will fast-forward by seconds within that video; pressing the record button as the camera starts up opens up the settings menu.

In conjunction with the Flip Mino’s introduction Wednesday, prices of the former Flip Ultra model will drop to $150 for the 60-minute model. The Flip Ultra 30-minute model will be phased out, as will the Flip Classic, which will cost $130 for a 60-minute unit.

Though the Flip Mino’s touch-sensitive buttons look great, they aren’t as functional as they needed to be. But if you really want a sleek, hip-looking gadget, you’ll learn to adjust to these new buttons. No matter which Flip you choose, Pure Digital’s software changes the way people capture and share videos, and that’s a great thing.

Edited by Walter S. Mossberg

• Email mossbergsolution@wsj.com