Palm debuts Pixi, cuts Pre's price

Palm unveiled its second phone based on its webOS platform, the Pixi, and also cut the price of the Palm Pre, as the smartphone maker continues to try and revitalize its business based around the new operating system.

[1]The Pixi, a candy-bar style phone with a full Qwerty keyboard, will be available in time for the holiday shopping season exclusively through Sprint Nextel, which is also the exclusive United States provider for the Pre. Palm did not release specific pricing or availability information for the Pixi, but it is expected to be cheaper than the Pre.

Palm's latest efforts to garner more market share highlights the white-hot competition in the U.S. smartphone market. Indeed, Motorola is set to debut its first Android phones tomorrow, and Sprint itself is also going to launch an Android phone, the HTC Hero.

Thus, Palm is clearly trying to broaden the appeal of its webOS devices. "One of the design goals was to make it more compact, more customizable and also more affordable," Katie Mitic, a Palm senior vice president, told Bloomberg.

[2]The Pixi has a 2.63-inch multi-touch touchscreen, a gesture area like the Pre, a 2-megapixel camera, GPS, an accelerometer and 8GB of internal storage. The phone also features an integrated Facebook application, and users will have the ability to change out the phone's back cover with five different cover designs.
        
Palm and Sprint also today cut the price of the Pre by $50, to $149.99 with a two-year contract and after a $150 instant rebate and a $100 mail-in rebate. That move comes a day after Sprint mistakenly began offering the Pre [3] to new customers at a $100 discount, lowering the final price to $99. The carrier pulled the offer, and said it had been made in error.

Pali Research analyst Walter Piecyk praised Sprint CEO Dan Hesse for securing the Pixi, and said it "looks like a solid phone, which should help fourth quarter sales along with new Android devices that are hitting the market." However, he doled out less praise for the Pre price cut.

[4]"Will a $50 price cut stimulate sales? Of course. But again at the risk (or intent) of being redundant, they are losing nearly 1 million customers per quarter," he wrote in a research note, referring to Sprint. "Why not think bigger and go for a $100 or even $150 price cut? It's not like the industry is settling into a less competitive market as it approaches 90 percent penetration as evidenced by AT&T's new offer today [5] which replicates T-Mobile's popular MyFaves."

Industry analyst Jeff Kagan sounded a more optimistic note. "The Pre sold briskly initially on the Sprint network, then calmed down. I expect the same with this new device," he said. "It is popular, but not as popular as the iPhone. But then again the iPhone is an Apple and it is iconic. No one expects it to be as hot."

Kagan said he believes Palm is planning a series of new webOS devices for other major carriers, just as it did with its Treo and Centro models. "I think this new Pixi will be just as popular as the Pre, and will help Palm and Sprint in their work to recapture market share," he said.

However, at least one analyst bemoaned Palm's choice of Sprint as the carrier for the Pixi. According to TheStreet.com, Credit Suisse analyst Deepak Sitaraman downgraded his rating on Palm's stock based on the company's partnership with Sprint.

Palm's stock was down 39 cents, or 2.6 percent, to $14.59 in late morning trading in New York City. Sprint was up just a cent to $3.71.

For more:
- see this release [6]
- see this Bloomberg News article
[7]- see this TheStreet.com [7]article [8]

Related Articles:
Palm potpourri: Sales estimates rise, suitors sighted and UK launch predicted [9]
Palm smartphone shipments drop 62% [10]
Sprint CFO says new iPhone not impacting Pre sales [11]
Sprint breaks sales records, looks to keep Pre momentum going
[12]Palm Pre goes on sale amid lines, tight supply [13]