By Walter S. Mossberg
Palm's Pre is smart, sophisticated and will appeal to those who want a keyboard. It could give the iPhone and Blackberry strong competition -- if it fixes its app store and can attract third-party developers. Read More »
Published on June 3, 2009
By John Paczkowski
What a wonderful curative the Palm Pre has proven to be for Palm. Especially considering that the device has yet to ship. In early January of this year, the company’s shares were trading below $3, having been dragged deep into the mud by a string of nasty quarterly losses. Five months later, after the Pre's announcement at CES, they're trading at over $10. Read More »
Published on May 28, 2009
With Palm’s shares up more than 900 percent since January, they were destined to suffer a correction someday. And now it seems that day has finally come. Shares in the handset maker fell some 23 percent last week amid concerns about increased competition from Google’s Android operating system, which is being rolled out on a number of devices at a variety of carriers, including Palm partner Sprint.
Like we didn’t see this one coming. Among the new features of Apple’s iTunes 9 media software is one that wasn’t announced this morning: An update that prevents the Palm Pre from synching with it.
Apple rolled out iTunes 8.2.1, a minor point release of its popular media software that provides "a number of important bug fixes and addresses an issue with verification of Apple devices." And devices masquerading as them. Like the Palm Pre.
Are sales of the Pre slowing or not? Without official numbers from Palm or Sprint, it’s nearly impossible to tell. But that hasn’t stopped analysts from taking a stab at it. Earlier this week, Pali research claimed Pre sales were tapering off. Now Pacific Crest is saying they remain “robust.”
Post-Pre launch, Palm may be, in the words of CEO Jon Rubinstein, "exactly where we hoped we would be." But how long the company will stay there is an open question. Because according to Pali Research, Pre sales slowed again last week.
Palm seems to have satiated pent-up early demand for its new Pre smartphone, constrained supplies be damned. In a pair of investor notes issued today, analysts at Pali Research and JP Morgan say that sales of the Pre have tapered off to a point where supply and demand are roughly in parity.
During its post-earnings conference call last Thursday, Palm refused to say how many Pre handsets have been sold to date. Or how many it believes it will sell in the first quarter of production. The company would say only, in the words of CEO Jon Rubinstein, that “sales have been strong and growing.” So until Palm provides specific Pre sales figures, we have only the estimates of analysts with which to gauge the device’s impact on Palm’s moribund smartphone franchise. And the latest estimates, from Edward Snyder at Charter Equity Research, suggest that the impact is great.
Well, here’s a nice data point to consider in advance of Palm’s earnings tomorrow. The company’s Pre App Catalog, which has been widely criticized for its paltry selection, just reached one million downloads.
It’s been three weeks since the Palm Pre debuted and Sprint is still having trouble keeping it in stock. This according to Sprint Nextel CFO Bob Brust, who says that supplies of the new handset continue to be tight and that Apple’s new iPhone 3GS hasn’t really had an impact on sales.
Palm has shipped 100,000 Pres since the device debuted on June 6. This, according to J.P. Morgan analyst Paul Coster, who estimates that more than 50,000 phones were sold in the first two days it was available and says the company may have sold another 50,000 in the days that followed.
Now we know why it was Palm executive chairman Jon Rubinstein and investor Roger McNamee on stage at the D conference last month talking up the Pre, and not CEO Ed Colligan: Colligan was on his way out. On Wednesday, Palm tapped Rubinstein as its new CEO.
Palm picked a hell of a day to launch the Pre. Two days before Apple’s World Wide Developers Conference. Two days before the unveiling of the iPhone 3G S, a new version of Apple’s iconic handset that runs twice as fast as its predecessor, shoots video with an improved three megapixel camera and boasts longer battery life and greater storage. And worst of all, two days prior to the announcement of a new $99 price point for the iPhone 3G, a disruptive move that puts the device in reach of far more consumers.
The Pre, Palm’s new bet-the-company handset, had a successful debut this past weekend. It sold out in hours at most locations on strong early demand, though limited supplies virtually ensured that would be the case. Sprint’s flagship Manhattan store had 200 units at launch. Its store in Boston’s Back Bay area had only 55. Another in San Francisco’s Mission district had 60. And some Best Buy locations reported having just 2 to 4 Pres on hand when their doors opened Saturday morning.
The Palm Pre officially went on sale this morning, and judging from initial reports--and my experience at a local northern California Sprint store--neither demand or supply was particularly overwhelming. Certainly, lines for the device were far shorter than those that extended from Apple stores for the launches of the iPhone and the iPhone 3G. Arriving outside my local Sprint store about an hour after they first opened, I found not a queue of eager Pre-buyers, but two kids making forts out of a few Pre shipping boxes left outside the store.
When Verizon Wireless CEO Lowell McAdam claimed his company would be selling the Palm Pre six months from now, he was apparently as full of it as a dairy farm manure spreader. At a Palm Pre launch event in New York city, Sprint CEO Dan Hesse dismissed McAdam’s claim as inaccurate.
If these rumors of shortages prove true and you don't manage to get a new Palm Pre this Saturday, here's the video you would have seen the first time you activated the device.
Last week at the All Things D conference, Palm investor Roger McNamee made a point of touting the Pre's supposedly female-friendly attributes -- like the fact that it has a mirror on the back. No mention of the shiny surface in this first TV ad touting the new phone, but this one certainly seems geared toward the xx set. Or maybe Palm has been stung by accusations that it's an Apple ripoff and wanted to come out with some distinctly un-Jobsian marketing.
The Palm Pre debuts this week. Next week, we should hear about a big update for Apple's iPhone. And by the end of the summer we'll have new phones running Android platform. So who's going to emerge as the winner? Easy, says Citigroup analyst Mark Mahaney: It's Google. But Mahaney isn't talking about Google's smartphone platform. He's talking about Google's core search business, which he thinks is finally about to see significant lift from mobile users.
If it is the Pre that will decide Palm’s fate in the smartphone market, if it is truly the bet-the-company device that it’s described as, then Palm has made a good bet and the company’s going to be around for some time to come. The early reviews of the Pre are in and they are, to a one, glowing -- with some caveats about a poor battery life and a small selection of apps. The gadgeterati's verdict on the device, after the jump.
In one of the most anticipated sessions of D7, Jon Rubinstein and Roger MacNamee of Palm Pre fame join Walt and Kara onstage to talk about the seemingly miraculous effect the hail-mary device has had on the fortunes of the beleaguered company. They also demo the smartphone.
Here's the video of Roger McNamee and Jon Rubinstein shown before their introduction to the D7 stage. McNamee and Rubinstein are shown trying to figure out the right marketing message for the new Palm Pre.
One of the simplest ways to create a shortage, and the buying frenzy that typically accompanies it, is to announce that there will be one. And this is precisely what Sprint CEO Dan Hesse did for the Palm Pre Tuesday. Speaking at J.P. Morgan’s Global Technology, Media and Telecom Conference shortly after Sprint announced the handset’s street date, Hesse said he anticipates that supplies will be limited, at least initially.
The great truism about rebates is that anything less than 100 percent redemption is free money for the companies offering them. That’s something Palm and Sprint are clearly counting on as they bring Palm’s new Pre handset to market with a $100 rebate.
Here’s the flip side of reports that Palm plans to deliberately keep supplies of the Pre artificially low to foster the perception of a shortage and spur demand: There will be a shortage, but it won’t be deliberate or artificial. Collins Stewart analyst Ashok Kumar claims that his supply chain checks indicate that Palm has “drastically reduced its production orders” for the Pre.
Palm hasn’t yet set its price or launch date, but it already has a winner on its hands in the Pre. That’s the word from RBC Capital analyst Mike Abramsky, who gave the device one hell of a write-up this morning. Seems Abramsky, who had previously been neutral on Palm, now believes the company has a chance at "smartphone leadership."
... The battle that’s going to be fought is not about hardware, but software.”
The Pre eats iPhones for breakfast.
– Roger McNamee at D7
D is unlike any other executive conference. Since its debut in 2003, D has brought to life the energy and excitement of the digital revolution in an unscripted, upfront and unparalleled way. Read more »
Don't miss a post! Sign up for our Daily Email and get AllThingsD.com delivered each day.
Get columns, blogs and video from D and All Things Digital on your iPhone. Download now »
