2nd UPDATE: Sprint To Launch Palm Pre Smartphone On June 6
May 19 2009 - 4:09PM
Dow Jones News
Sprint Nextel Corp. (S) and Palm Inc. (PALM) said Tuesday that
they plan to launch their heavily anticipated Pre smartphone on
June 6.
The Overland Park, Kan., wireless carrier and the Sunnyvale,
Calif., mobile device maker are both badly in need of a hit device
to trigger their respective turnarounds. Sprint wants to stem the
million-plus contract subscribers that leave each quarter, while
Palm is hoping its new software will change its reputation for
dated products.
But the Pre faces stiff competition. Apple Inc.'s (AAPL) next
iPhone could surface a few days after the Pre at the company's
World Wide Developers Conference, where the current version was
unveiled a year ago. AT&T Inc. (T) wireless head Ralph de la
Vega previously said he would like to turn the June launch of an
iPhone into a tradition.
An Apple spokeswoman declined to comment on the next iPhone,
only pointing to the company's plans to release a software update
for the device.
Sprint Chief Executive Dan Hesse stoked the hype early Tuesday,
saying he expects high demand.
"We'll have shortages for a while," Hesse told analysts during
an industry conference on Tuesday.
The Pre will cost $199.99 with a two-year service agreement and
after a $100 mail-in rebate.
Kevin Packingham, who runs product and technology development
for Sprint, said the Pre is "extremely competitively priced."
Of course, the next iPhone could come out at a lower price,
which could effectively halt consumers looking to jump carriers for
the Pre. Apple and AT&T slashed the price of the device by $200
a year ago. There's also the risk that the phone's launch could get
drowned out by the hype surrounding the iPhone.
Sprint shares recently rose 21 cents, or nearly 4%, to
$5.53.
Palm shares fell 2.9% to $11.71, partly on concern that the Pre
could face quick competition from the iPhone, but also on fears
that the early shortage Hesse hinted at suggests lower unit
sales.
Palm marketing head Brodie Keast declined to comment on the
stock movement.
Both Palm and Sprint said the iPhone didn't factor into the
timing of the launch.
"We really didn't look for any outside influence," Packingham
said.
On the iPhone, he said: "We want customers to compare each
device."
Palm's Keast said, "Ultimately, it was Sprint's call. ... We
just wanted to ship this thing when it was ready."
Macquarie Securities analyst Philip Cusick estimates that Palm
could sell 100,000 units in its fiscal fourth quarter ending this
month, up from a prior estimate of 50,000. He was a bit less
optimistic about the Palm's early success after Hesse's
comments.
Sprint said Tuesday the phone would be sold at Best Buy Co.
(BBY), RadioShack Corp. (RSH) and some Wal-Mart Stores Inc. (WMT)
stores. It will also be available through Sprint's Web site.
Sprint hopes the Pre will act as a strong retention tool for the
company. The carrier has lost more than 6 million subscribers in
the last six quarters.
The Pre should blunt some of the losses, according to Cusick. He
estimated that Sprint would lose 1.1 million contract customers in
the second quarter, narrower than the loss of 1.25 million in the
first quarter.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020;
roger.cheng@dowjones.com