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Summary:

Palm today announced the Pre Plus and Pixi Plus are coming to AT&T’s network. Wi-Fi at AT&T hotspots is included but will that be enough to move webOS handsets? AT&T will have to help market the phones while Palm hopes to compete with Apple’s iPhone.

palm-pre-thumb

While many — including the stock market — are predicting Palm’s demise, the company rolls on. Timed nicely with the CTIA telephony trade show, Palm today announced that its Pre Plus and Pixi Plus handsets are arriving on AT&T’s network. After $100 mail-in rebate, the webOS phones are priced at $149 and $49, respectively. Considering that Palm outed GSM versions of its new phones last year, the move doesn’t surprise. The question now is: how much will the second largest U.S. carrier help Palm?

When Verizon Wireless began offering the two webOS devices in January of this year, the hope was that they would be big sellers. Unfortunately, limited marketing combined with bad timing didn’t provide the results Palm was looking for. Last week, on Palm’s quarterly results call, the company reported 408,000 handsets in customer hands, which is 29-percent fewer than the prior quarter. This is after the introduction of the webOS phones on the largest U.S. carrier, although Verizon only carried the handsets for just one month of the quarter. PreCentral noted that Jon Rubinstein, Palm’s CEO, thinks the Verizon launch timing hurt his company’s chances:

“I agree with your premise that if we could have launched at Verizon earlier, prior to Droid, that we would have gotten the attention that the Droid got and since I believe that we have a better product, I think we would have even done better.”

There’s no Droid on AT&T’s network to contend with, so that has to help Palm’s chances — at least until we see what Apple does. The iPhone is generally on a one-year refresh or update cycle, so within the next three months, many expect new handsets, an updated operating system and possibly price cuts on current models. It’s the third scenario that’s may impact Palm the most. Given the attention and high levels of praise for the iPhone, Palm would have a tough time selling webOS phones strictly based on a cost comparison. That’s where the marketing comes into play and AT&T’s efforts there are still an unknown. Another small factor is the recent release of Google’s Nexus One for AT&T. Although an unsubsidized $529 handset is a tough sell against a subsidized phone, it’s estimated that Google has sold 135,000 units in the first 74 days of availability. That’s almost one-third the number of webOS phones sold in one quarter without any carrier marketing or mainstream media commercials.

Unlike the Palm handsets for Sprint, the Palm devices won’t include free navigation with the data plan — instead, they’ll support the AT&T Navigator subscription service for an additional fee. But AT&T is leveraging its over 20,000 hotspots — the Pre Plus and Pixi Plus will seamlessly transition from 3G data to Wi-Fi when in range of an AT&T hotspot. If this move doesn’t buy more time — and generate more cash — for Palm, it’s possible the company finally gets purchased. Colin Gibbs offers his odds of different scenarios in case this plays out. But James thinks there’s still one last option for Palm in the heating up tablet market — a webOS slate could be just the ticket.

I think the AT&T move will simply buy more time for Palm. From a consumer standpoint, I recently dumped the Palm Pre I purchased simply because the operating system doesn’t yet feel finished and because there isn’t a wide range of apps available for it. Without the right tools in my kit, I can’t do my job. And without webOS devices gaining traction with consumers, developers will continue to focus where the money is on other, more popular platforms. The longer that takes, the tougher the situation gets for Palm and its customers.

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  1. Well. In light of other news about Palm today, I don’t think this would help. If they don’t feel confident enough in GSM version sales to keep producing them then I don’t think this will help.

    I agree with you guys. The hardware is junk. I would have considered a WebOS phone if… I am buying an AT&T N1 as soon as I get back into the US.

    Maybe it offers an alternative to people who want a physical keyboard (like my wife). She hates the iPhone and uses a Blackberry Curve 8320 (junk). But to be perfectly honest if I needed to put her on a different phone I would not push her towards a dying system with junk hardware. I’d make her wait for the HTC Salsa.

    http://www.dailytech.com/article.aspx?newsid=17943

  2. It must have been nearly impossible in the era before smart phones for people to do their jobs. Feature phones were likely inhibiting people world wide to get things done and impacting our GDP and national productivity. I can see why it was the best move to dump your Palm!

    I own an Android phone, my girlfriend owns a Palm and honestly, the Palm feels like a slick, polished OS versus the Windows Mobile rip off that is Android.

  3. Agree, it would buy more time for palm. I have a feeling that att customers are better than verizon i.e. they are “smarter” smartphone users. Pre will be the second best phone on Att after the iphone. So they can sell a few. on the positive side , att pre is truly multitasking monster with simultaneous voice and data. Pre is the best phone on verizon, but the sales folks are pushing droid which has a crappy keyboard, slower browser.

  4. Don’t think this will help Palm much. I decided not to get a Palm Pre almost a year ago because I thought their hardware was outclassed. The entries since, by Palm and their competition, haven’t done anything to change my mind. Love the OS, but if I were still on AT&T when this came out I would get an iPhone 3GS instead … add to that equation, it will probably be competing with a 4th-gen iPhone on the same network and the prospects look pretty dismal for Palm. Slap the OS on something that competes with the Nexus One, hardware-wise, and I’ll take notice.

  5. I remember all the hype at CES and CTIA. I also remember all the insiders cashing out their stock at the height of the Palm bubble. If they didn’t have faith, why should we?

    At the current market cap Palm is a likely takeover target. Probably not be one of the majors but by a company looking to enter the smartphone market or a second (Sony Erickson?) or a third-tier player looking for a brand.

  6. While I’ve always understood when you said that webOS doesn’t have the apps you need, I think you should really specify which version of the OS was the last you used when you claim that it’s unfinished (I believe it was 1.3.5?).

    While it’s got a few changes that have been problematic for developers and a couple bugs that should be fixed by 1.4.1 later this week or next week, I think it’s misleading to say that it’s unfinished anymore.

    1.4 is honestly the OS that Palm should’ve released at launch if they had the time to.

  7. No way. If you’re on AT&T and need a smartphone, you’re taking iPhone over Pre 98% of the time.

  8. Unfortunately I don’t think AT&T will help Palm at all. For 99% of users the iPhone is a better choice – very few people will care that Pre multitasking is better, or that the Pre can be a Wi-Fi router. I love my Sprint Pre and never had any hardware problems. For now there is no device that would be better for me, but Android is evolving rapidly and we’ll have to see what Palm does next.

  9. Even though being a big Palm Pre fan, I dont think launching Palm pre plus or Pixi plus on AT&T is going to help Palm in any respect.

    I think, it is time for Palm to release a new hardware, completely new form factor more screen real-estate and faster processor.

    They could have waited for the release on AT&T and then alongside on Sprint a new PALM device could have been launched, making it more successfull.

    Anyone on AT&T much rather prefers an iPhone, hence a killer hardware is much needed to get any kind of traction from those customers.

    Here’s to hoping that a new PALM device is soon to be coming on Sprint, now that AT&T is only getting the Pre Plus and Pixi plus.

  10. Kevin, I must confess that I am a little confused by your perspective on the Palm Pre. Having listened to the podcast regularly as well as regularly read this blog, it is my understanding that you “dumped” the Pre because of a lack of apps that you needed. Fair enough. But there seems to be a master narrative evolving in the tech blogosphere about Palm that goes something like “They have an amazing operating system, but Palm will die quickly; what a shame.” At the same time, there is a master narrative about Android– “Amazing operating system; it has a lot of room to grow and innovate (meaning it is not fully mature yet); I want to go along for the ride!” I just don’t get it. As I recall, and have found support via a quick search of the web, the iPhone 1G launched in June 2007 while the App Store launched June 2008; a year later. Yet, when the Pre was launched, folks wanted a robust WebOS app store pronto and every week it didn’t materialize was proof of Palm’s impending demise. At the same time, we seem to be content to wait for Android development to take place. Please let me know where I have gone wrong with this. And know that my questions are in no way an attack on Kevin. I value his thoughts and experiences, I listen to the podcast faithfully, and am just using his comments re: the Pre as a stand in for lots of comments I am reading.

    1. I take no offense or consider your thoughts an attack in any way, so no worries there! :)

      First up – my needs are different from the needs of others, so a webOS handset may indeed be the best choice for some people. I’d never argue otherwise. I simply didn’t think it was the best choice for me after owning it for 8 months. It was partly a timing issue. Not all that much changed in those 8 months in terms of webOS — or perhaps, not enough would be the better way to put it.

      During that same time however, I witnessed many more apps that I wanted or needed to use arrive on other platforms. And Android made a big leap in going from 1.6 to 2.0 to 2.1 in a few short months. I also wanted more pep in my phone and found it in the 1 GHz chip used in the Nexus One. So it was a combination of things that led me to my decision.

      To your valid points about the iPhone App Store launching a year after the first iPhone — note that I waited a relatively long time to jump on board the Android train. I had a G1 review unit before the phone was launched in late 2008. I repeatedly said that it would take a good 6 months to gain traction because it didn’t have a wide variety of applications. And it took a while for that traction, but once it took hold, I saw more potential. Until that point, I wouldn’t even consider Android for my own use, nor did I until January of this year.

      From my perspective — clearly arguable — Google is moving the Android platform along faster than any other on the market right now. I simply couldn’t wait for Palm to meet my needs. They may yet survive, and I hope they do, but the market is moving along at a very fast pace and is filled with good competitors.

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