Most of the focus in the smartphone business over the last month has passed Palm (PALM) by. The new 3G Apple (AAPL) iPhone, RIM’s (RIMM) earnings, the Nokia (NOK) purchase of the piece of Symbian that it did not own, and the status of Google’s (GOOG) Android phone software have grabbed the headlines.
Palm has been trying to work its way further into the smartphone market as well. It has launched its new Centro, and the reviews have been fairly good. The company still sells the Treo.
Palm is offering an "unlocked" version of the Centro, which should work on a number of networks, for $299. Sprint (S) is marketing its new Samsung Instinct for $129, and Apple’s new iPhone will cost $199 with an AT&T (T) calling plan. A Palm Centro goes for $99 with a Sprint calling plan.
With all the new product in the market, Palm is probably up against too much competition to survive, even if it can sell a million units again in the current quarter. It did that in the quarter ending February 28, but its average price per phone was only $299. In the same quarter a year earlier that number was $379. If Palm needs to compete on price, and it does, it may well not make it to this time next year.
Palm’s new product is simply being overwhelmed by the number of new options in the market. Its attempts to keep units moving at past levels may work. But, over the next couple of quarters, it is what it can charge for its handsets that will kill it.
Douglas A. McIntyre
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