The Palm Pre was released on June 6, and the verdict is that it delivers on many fronts and can be strong competition for the iPhone if it is able to fix its app store and attract third-party developers. Analysts are calling the launch a success. Let’s take a closer look at the phone’s features and how it fares against competitors.
According to Walt Mossberg of the Wall Street Journal, the Pre’s biggest advantage over the iPhone is that, in addition to sporting an elegant touchscreen interface that matches or exceeds Apple’s, the new Palm (NASDAQ:PALM) device has a real, physical keyboard that slides out from its curved body. The Pre is not the first smartphone with a QWERTY keyboard; Nokia, BlackBerry and Samsung have QWERTY devices too, but Palm is the first to effectively combine web browsing and touchscreen interface with a physical QWERTY keyboard.
Two years ago, Jon Rubinstein, the former head of Apple’s iPod division, joined Palm as the executive chairman. Rubinstein and Steve Jobs could not agree on the iPhone’s strategy regarding the keyboard. Rubinstein has executed well on his vision of integrating the keyboard with the smartphone, and we have yet another potentially revolutionary product. I have personally had problems with Apple’s lack of a keyboard, so I am looking forward to experimenting with the Pre.
The best part about the Pre is its interface and operating system, webOS. The webOS offers multitasking, a feature that even the iPhone cannot boast. You can run different applications at the same time and switch between them. This brings us closer to the computing experience and is an important development in the convergence device movement.
These two features of the Pre are something that the iPhone probably would not be able to counter in its new iPhone operating system and device being launched today. Apple has already announced that it would be adding MMS, universal search, and copy and paste, which are also available on the Pre. It is expected to add video recording, 32GB of memory, and faster speed. It is also expected to release a version priced at much less than $199.
The Pre’s 3MP camera cannot record video and has only 8GB of memory with no slots to add more. However, it is faster than the iPhone and comes with a removable battery, but the battery life is average at only five hours of talk time, five hours of web surfing, 12 hours of music playback and five hours of video playback.
Now let’s compare the price factor. The Pre is available for $200 after a $100 mail-in rebate while the 8GB iPhone is available for $199. However, the Sprint Network offers a monthly plan that includes unlimited texting while AT&T charges extra for texting.
Another upside to the Palm Pre is that it has an exclusive contract with Sprint only till the end of 2009. Verizon is expected to have a device within six months and even AT&T has shown an interest in having the Pre on its network. And with the added privilege of being promoted on three networks, the phone is likely to see strong sales. However, initial production of the Pre is limited. Macquarie Securities analyst Philip Cusick expects Pre sales of 1 million in the quarter and about 6 million in fiscal 2011. Compare this to iPhone sales of 2.4 million in its first quarter, BlackBerry Bold sales of about 1 million in its first full quarter, and BlackBerry Storm sales of 2 million in its first quarter.
As we saw in our last post, there is an increasing focus on applications, and Palm has a long road ahead. It has just a dozen applications in its application store compared to over 40,000 in the iPhone App store. But we can expect Palm to bounce back on this front as before the iPhone, it had the widest collection of third-party applications.
Palm is currently trading around $12 with a market cap of about $1.65 billion. We had discussed earlier the possibility of Nokia or Dell acquiring Palm. The stock hit a 52-week high of $14.14 on June 5, just before the Pre release. It hit a dismal low of $1.14 on December 2.
Readers may recall my interview with Eric Benhamou at the wake of the Palm-Elevation deal in September 2007. I have said repeatedly over the last six quarters that Palm needed the time for Rubinstein and team to work on a new product. Many analysts wrote Palm off meanwhile, which drove the stock down to its dismal lows. I am happy to see that the company has delivered a good product and at least has a chance at returning to a position of credibility. And I am also happy to see that Jon Rubinstein has found himself a nice platform from which he can give shape to his own vision, unencumbered by Steve Jobs’ overpowering persona.