Pre-mature

Don’t get too excited about the Palm Pre, folks. Palm themselves is going to kill it the same way they they killed the Foleo, which could have been the standard-bearer netbook: by fundamentally misunderstanding the mobile market. When they should have unveiled a slick and easy Linux-based netbook, Palm insisted on tying it to a Treo and crippling that the device could do on its own. They were right in that small, cheap laptops would be the next Big Thing in computing, but insisted that they knew better than their customers what their customers wanted. And without a Jobsian Distortion Field (JDF) you really can’t pull that off.

And with the Pre, they’re doing it again. Palm CEO Ed Colligan made a telling comment at yesterday’s CES presentation to All Things Digital’s Peter Kafka:

The biggest unknown is price, which went unmentioned during the demo. My assumption is that Palm (PALM) would try to take market share by coming in significantly lower than the $200 or so Apple wants for its iPhone. But when I ran that theory by Palm CEO Ed Colligan, he looked at me liked I’d peed on his rug. “Why would we do that when we have a significantly better product,” he asked, then walked away.

Again, Ed fundamentally doesn’t get it. The iPhone 3G’s release at $199 changed everything we knew about smartphone pricing. I’ll be dollars to donuts Palm is expecting to get $299 for the Pre with a new 2 year Sprint contract. At that price, they’ll be a niche player at best and fade away before 2010. I’m skeptical of Palm’s assertion that they can go it alone without a supporting ecosystem by tying into everyone else’s ecosystems, uniting disparate sources of mobile data. But if they plan to do it at a 50% price premium in these troubled economic times (drink) over the competing iPhone for AT&T, Blackberry Bold or Storm on Verizon and G1 on T-Mobile, they’re riding the Fail Whale.

4 thoughts on “Pre-mature”

  1. You’re right on the price front there I think.

    I’m most curious as to how it’ll play out as a world phone, with the HSDPA version they were talking about: Europe [and to a lesser extent, Asia] is a lot more tolerant for high prices with no contracts, or pay nothing for the phone on a 2 year contract [I pity you Americans sometimes :P].

    I think that it’s potential lies in the GSM version, not this Sprint stuff. If they want to save themselves – and I believe they can with the Pre and webOS – they’ve got to get the price right and piss off this CDMA-exclusive crap as quick as possible.

    Market presence. Get it out there as much as possible, and you’ll see your phone do well. It has the potential [as did the Foleo mind you, and I still would like a RedFLY if it wasn’t so ugly!]: let’s just hope they don’t squander it.

  2. I think it’s a little too early to count Palm out but they do have an uphill battle in front of them. The real secret sauce here is in the marketing. Technically, windows mobile can do more than the iPhone but most consumers wouldn’t know that; they see the slick Apple adds and assume the iPhone is more powerful because the iPhone interface is so slick.

    So, how do you market the Palm Pre? While it may be more capable than the iPhone you will probably not convince iPhone users of that. Consumers can do pretty well everthing they need on an iphone or android phone, so why try this new OS? Business users want what is proven and that is Blackberry and WinMo.

    The new Palm OS could be better than all other mobile OSes but it doesn’t matter because you have to have the better marketing engine. Anyone need a like-new Betamax player?

    Darren Humphries

  3. I agree with Jeff’s points. To those that say there is a “tax” on the iPhone; there is no “tax” on the iPhone, you pay the same amount for any of AT&T’s smartphones. The tax argument is pointless. Verizon is the worst when it comes to pricing, so leave that argument at the door and move on to intelligent more intelligent points.

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