Palm Pre Plus, Pixi Plus on AT&T — Will it Help?

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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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