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.