Palm's Pre Moment of Truth

30-09-2009

by Ralph Averbuch

Has Palm made the right call in partnering with O2 to sell the Pre, when all its customers own iPhones already?

We've said before that the long and sometimes haphazard performance of Palm in its many guises was going to meet a make or break point very soon. It seems that time is pretty much upon us with Palm now about to venture forth with the Palm Pre outside of its home market. Domestically things haven't gone too well with less than stellar sales. Meanwhile O2 will begin selling the Palm Pre exclusively in the UK and Ireland. However, at about the same time the other networks, perhaps most notably Vodafone, will begin selling the iPhone 3GS. That's going to hurt Palm. After all, O2 has probably sold all the iPhones it could to its customers who were interested in trading up or trading over from other networks. Now, with the Pre available to the same customer base, surely there will be the issue of customer saturation? Anyone who has already invested time and effort in learning to use the iPhone and perhaps spending more cash customising it with apps, is surely going to be reluctant to wave goodbye to that investment. Meantime, anyone who remained loyal to Vodafone will shortly have the opportunity to upgrade to the latest iPhone and no Palm Pre in sight. That's got to be bad for a phone that's supposed to be taking the fight to Apple. Surely the smart money would have been on the smartphone maker chasing all the non-converts to the iPhone who stayed loyal to Vodafone. Instead Palm will be chasing the very customers that already own smartphones at O2 courtesy of the last two years exclusivity to that network. There is little doubt that in the Palm Pre we see a true contender to the iPhone, yet there's just no getting away from the feeling that Palm's been less than smart in its tactics for achieving maximum sales of its make-or-break handset. If it doesn't quickly gain traction in global mobile markets Palm could simply collapse as funds are exhausted and it becomes nothing more than a footnote in the history of the mass smartphone market.

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