iPhone v. Pre (Revisited)

  • Posted: 22 June 2009 03:36 PM

    With more than 1 million iPhone 3G S units “sold” in three days, let’s revisit the Pre as the so-called “iPhone killer.” Obviously the media hype about the match-up didn’t match the results. IIRC, somewhere between 50k and 100k Palm Pres were sold in the first few days following release.

    The 3G S release sales results were exponentially greater and the new pricing on the 3G iPhone only heightens Apple’s competitive edge. What does the3G S iPhone’s staggering results in the first three days of release say about competition in the smartphone market?

    As one member pointed out at the time, the Pre’s results might be “good enough” for Sprint in terms of slowing customer defections. But following this weekend’s results for the 3G S, what does all of this say about current competition in the smart phone market?

    What does Palm need to do to create a viable smart phone market for itself and how might the weekend’s results be viewed by other handset makers such as RIMM and Nokia?

         
  • Posted: 22 June 2009 04:13 PM #1

    DawnTreader - 22 June 2009 06:36 PM

    What does Palm need to do to create a viable smart phone market for itself and how might the weekend’s results be viewed by other handset makers such as RIMM and Nokia?

    IMO, it already did. It may not be as big as Apple’s, but a good start. If I was stuck with Verizon and not an Apple junkie, it would be easy to buy a Pre.

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  • Posted: 22 June 2009 04:21 PM #2

    litespeed - 22 June 2009 07:13 PM
    DawnTreader - 22 June 2009 06:36 PM

    What does Palm need to do to create a viable smart phone market for itself and how might the weekend’s results be viewed by other handset makers such as RIMM and Nokia?

    IMO, it already did. It may not be as big as Apple’s, but a good start. If I was stuck with Verizon and not an Apple junkie, it would be easy to buy a Pre.

    Right. But that doesn’t position Sprint to compete as effectively as desired with Verizon and AT&T and I’m not sure Palm can remain an independent enterprise for long without a blockbuster product. While the Pre is a nice product, it may not give Palm the momentum in needs to find a buyer for itself at the best price and two major cell service carriers (Verizon and AT&T) are pulling away from the pack.

    Personally, I see any smartphone not running Windows Mobile as both a competitor and an ally. For purposes of moving the various digital handsets as far away from MSFT’s OS dominance as possible, I’d like to see the Pre achieve some success. However, I’m not sure Palm can exploit the Pre as perhaps some had hoped to keep the company growing at an attractive and competitive pace. Further, the Pre’s app store is paltry by comparison to the iPhone and Palm needs more to create and sustain a viable handset eco-system for its products.

         
  • Posted: 22 June 2009 06:56 PM #3

    DawnTreader - 22 June 2009 07:21 PM
    litespeed - 22 June 2009 07:13 PM
    DawnTreader - 22 June 2009 06:36 PM

    What does Palm need to do to create a viable smart phone market for itself and how might the weekend’s results be viewed by other handset makers such as RIMM and Nokia?

    IMO, it already did. It may not be as big as Apple’s, but a good start. If I was stuck with Verizon and not an Apple junkie, it would be easy to buy a Pre.

    Right. But that doesn’t position Sprint to compete as effectively as desired with Verizon and AT&T and I’m not sure Palm can remain an independent enterprise for long without a blockbuster product. While the Pre is a nice product, it may not give Palm the momentum in needs to find a buyer for itself at the best price and two major cell service carriers (Verizon and AT&T) are pulling away from the pack.

    Personally, I see any smartphone not running Windows Mobile as both a competitor and an ally. For purposes of moving the various digital handsets as far away from MSFT’s OS dominance as possible, I’d like to see the Pre achieve some success. However, I’m not sure Palm can exploit the Pre as perhaps some had hoped to keep the company growing at an attractive and competitive pace. Further, the Pre’s app store is paltry by comparison to the iPhone and Palm needs more to create and sustain a viable handset eco-system for its products.

    You are right about the paltry app store, but the one advantage the Pre has (or will have) before Apple is multiple carriers :-(

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  • Posted: 22 June 2009 07:23 PM #4

    litespeed - 22 June 2009 09:56 PM

    You are right about the paltry app store, but the one advantage the Pre has (or will have) before Apple is multiple carriers.

    You have a point. I don’t see Apple renewing the exclusive agreement. AT&T should make the best of the deal it has now and position the company to compete for new customers and work hard at keeping its existing iPhone customers as the deal begins to expire.

         
  • Posted: 23 June 2009 12:36 PM #5

    Got to play with the Pre for about 15 minutes or so yesterday (a coworker of mine bought one over the iPhone and I detected just a hint of regret in her voice).  Anyway the webOS is nice, it is definitely healthy competition for the iPhoneOS.  Her main complaint, “the battery life just absolutely sucks and the app store for the Pre has nothing in it”.  The big plus for her was the ability to multitask.  But therein lies the problem.  Her biggest plus is the direct cause of her biggest complaint.  Overall I don’t like the design of the Pre or the overall feel of the build quality.  I wouldn’t call it cheap but after holding an iPhone it just doesn’t feel right.  Anyway…that’s my take.  WebOS good but not nearly good enough for me to even consider switching.

         
  • Posted: 24 June 2009 12:53 AM #6

    Rager93 - 23 June 2009 03:36 PM

    Got to play with the Pre for about 15 minutes or so yesterday (a coworker of mine bought one over the iPhone and I detected just a hint of regret in her voice).  Anyway the webOS is nice, it is definitely healthy competition for the iPhoneOS.  Her main complaint, “the battery life just absolutely sucks and the app store for the Pre has nothing in it”.  The big plus for her was the ability to multitask.  But therein lies the problem.  Her biggest plus is the direct cause of her biggest complaint.  Overall I don’t like the design of the Pre or the overall feel of the build quality.  I wouldn’t call it cheap but after holding an iPhone it just doesn’t feel right.  Anyway…that’s my take.  WebOS good but not nearly good enough for me to even consider switching.

    Thanks for the feedback.  grin

    Would you say it’s “good enough” for someone who prefers not to switch to AT&T but not good enough in direct competition with the iPhone, the carrier issue not withstanding?

         
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    Posted: 24 June 2009 10:04 AM #7

    Shortages of Palm Inc.‘s (Nasdaq: PALM) newly launched Pre will continue, but the smartphone has not felt any impact from last week’s launch of Apple Inc.‘s (Nasdaq: AAPL) iPhone 3GS, Sprint Nextel Corp. (NYSE: S) Chief Financial Officer Bob Brust told investors at Wachovia Corp.‘s Annual Mid-Year Equity Conference during a webcast. “We still have a backlog of subscribers but it’s not unmanageable and we get shipments every week,” Brust said. Analysts estimate between 50,000 and 100,000 Pres were sold in its opening weekend earlier this month, while Apple said Monday the new iPhone sold 1 million units in its opening weekend.

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    Posted: 24 June 2009 10:09 AM #8

    Last ten days, PALM vs AAPL price movements:

    GREEN is Apple. As of yesterday, Apple down 3.2% Palm up 12.6%

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    Posted: 24 June 2009 10:30 AM #9

    Tan
    Thats the irony of the stock market?  Apple sells 1M units at 600 and Palm sell 100K units at 500 and which is rewarded.  It will take Palm a year to match what Apple sold in 3 days.  That said I wish I was playing with Palm right now.

         
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    Posted: 24 June 2009 11:19 AM #10

    Palm sold 50,000 in the first weekend and sales are up to 150,000 now! Pathetic next to Apple. This says volumes about buzz, apps, manufacturing, marketing, and distribution rather than the phone itself. It’s not about the phone, rather what has been built around it that matters. It seems Palm is too little to build a major environment around the phone. They expect it to sell just because it exists.

    Palm has sold 150,000 Pres

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  • Posted: 24 June 2009 11:42 AM #11

    DawnTreader - 24 June 2009 03:53 AM

    Thanks for the feedback.  grin

    Would you say it’s “good enough” for someone who prefers not to switch to AT&T but not good enough in direct competition with the iPhone, the carrier issue not withstanding?

    No problem.  Nice to finally be able to contribute something relevant here.  grin

    It’s definitely “good enough” in the sense that if I were a Sprint customer and didn’t want to switch carriers, I would be a happy Pre owner right now.  I don’t know if it’s compelling enough to move somebody from Verizon and it’s definitely not compelling enough to switch from the iPhone. 

    I will say however that my coworker switched from Verizon to Sprint just to get the Pre, but she seems pretty anti-Apple and anti-AT&T so there was probably no way to win her as customer.

    Finally, I have about 6 friends that are on Verizon ask me if there’s any truth to the rumor that the iPhone is coming to Verizon.  They seem to want an iPhone bad, but are absolutely unwilling to leave Verizon for it.  I think Apple really needs to make a Verizon iPhone and you’ll see the numbers truly explode.

    I know it’s all anecdotal but I really feel that there is huge pent up demand for iPhone on Verizon.

    Phil

         
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    Posted: 24 June 2009 12:06 PM #12

    Rager93 - 24 June 2009 02:42 PM

    Finally, I have about 6 friends that are on Verizon ask me if there’s any truth to the rumor that the iPhone is coming to Verizon.  They seem to want an iPhone bad, but are absolutely unwilling to leave Verizon for it.  I think Apple really needs to make a Verizon iPhone and you’ll see the numbers truly explode.

    I know it’s all anecdotal but I really feel that there is huge pent up demand for iPhone on Verizon.

    Phil

    Count at least 3 more in my family among those wanting the VZ iPhone.  If it came to VZ, I suspect the iPhone sales numbers would increase no less than 50%.

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  • Posted: 24 June 2009 01:00 PM #13

    I also know many (myself included) that are on Verizon Wireless, don’t want to switch, but still want the iPhone.

    However, I’m about to make the switch anyway.  grin

    I think Apple has been brilliant with this approach, to be completely honest.  They worked out a hugely profitable deal with AT&T (profitable for both, but more-so for Apple).  They then watch sales grow exponentially.  New product releases (3G and 3GS) as they hone their skills in both cell phone software (3.0) and hardware.  And, I suspect the timing of the end of the exclusivity agreement with AT&T will come when things start to slow down enough with new subscribers (i.e. they reach the point where they can’t lure anyone else to AT&T).  But by then, they will have 70-100 million iPhones out there on AT&T, and then BAM an immediate 30-50 million more on Verizon late 2010 or into 2011.  Brilliant.  Not to mention the next huge hardware and software release corresponding with the Verizon release.  Profit margin will most likely fall a bit (no longer exclusive with AT&T, and VW will probably not give as good of a deal), but by then they have a big enough market share that it doesn’t matter.

    Just my opinion…

    Ron

    Couple more comments:  Margins may not fall, now that I think about it.  First, they will continue to lower cost as they become more familiar with building cell phones (remember, they have only been building them for a few years).  And, with higher economies of scale, they will see more cost improvement.

    [ Edited: 24 June 2009 01:07 PM by RonMacGuy ]      
  • Posted: 24 June 2009 01:09 PM #14

    Count me in for VZ, at least 2 more iPhones sold here the day it comes to VZ.  Thing is:  it is not that VZ is good (actually it isn’t good;  the coverage is good here in Eastern Mass. but VZ service, sales, contracts etc. are predatory, lying, unresponsive, confusing….  just like all the other cell companies I guess).  And I think that ATT coverage here is OK now too, though once upon a time it was inferior.  It is simply that it is too hard to get all three of my family accounts to the point of expiring at the right time, so the penalties for switching are always going to be substantial; and then the fact that most of my friends and family are on VZ so those calls are now free all the time.  And, the darn data plan from ATT is too much money for how much I would need it.  Basically, it is just too much HASSLE AND EXPENSE to switch carriers.  But would I gladly put up $99 (or even $199) for the pleasure of owing another incredibly cool Apple product?  You bet.  In a heartbeat.  I mean, that’s a lot less than I just paid for a MacBook….

    Please, your Steveness, hear my plea….

         
  • Posted: 24 June 2009 01:13 PM #15

    I liked the headline premise…can Palm hold its own.

    Good one.