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Sprint sold less Pre and Pixi handsets than expected

Palm has been trying to turn its smartphone fortunes around with webOS devices like the Pre and the new Pixi. The problem in many eyes is that the innovative features webOS devices offered when first seen in January 2009 at CES were common on other smartphones once Palm finally got around to launching the Pre.

The launch of the Pixi running webOS in October gave Palm a less expensive smartphone for consumers to consider, but didn’t help Palm gain as much as it had hoped. Palm has reported a larger than expected quarterly loss for fiscal Q2 after revealing that Sprint has sold less of the Pre and Pixi handsets than Palm expected.

Palm shares dropped 7.7% in trading after the news was reported. Palm also reported a larger than expected loss of 37 cents per share compared to the analyst predictions of a 32 cents per share loss.

Palm is pointing the finger at other devices available on the Sprint network like Android phones from HTC and Samsung for the less than expected demand for its smartphones. Palm says that it shipped 783,000 smartphone units over the quarter, which is up 41% compared to last year. However, only 573,000 of the phones shipped ended up in consumer hands meaning that Sprint has a huge stockpile of the devices sitting in its stores unsold.

The introduction of the Pixi also drove the average selling price of a Palm handset from the $427 point last quarter to $375 this quarter. Palm still maintains that it will reach its predicted fiscal 2010 revenue forecast of $1.6 to $1.8 billion. Analysts are wondering when Palm will break the Pre and Pixi free of the less popular Sprint network and move it to other more popular networks.

Analyst Shaw Wu from Kaufman Bros. said, "Number one, when do they sign more carriers beyond Sprint here in the U.S? At what time can they leverage their spending?"

The smartphone market is very competitive and a new report issued this week found that Microsoft's Windows Mobile is the only OS in the smartphone realm losing marketshare. The report also has the iPhone in second place overall with RIM in the clear lead in the market.



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Not Unexpected
By clovell on 12/18/2009 11:55:47 AM , Rating: 2
Sprint has the best value plans, by far - particularly when it comes to data. The Pixi isn't at a bad price point, but the Pre is - especially relative to its peers. From a market penetration perspective, the Pixi would be better priced at $79.99 and the Pre at $99.99. And the touchstone charger is just a bit ridiculous - drop that to $44.99 and it'll sell.

Palm came out swinging hard, but they have to get used to not being the only game in town. They have got to be more agile in order to stay competitive.

I expect that, after this holiday season, sometime in early '10, we'll see those price points met. I'm also starting to see commercials that don't suck (i.e. the new Pixi commercial). The old ones seemed to be in the same style as the new Prius commercials, which are great when you're on your 3rd gen product and have built brand name over the last decade.




RE: Not Unexpected
By melgross on 12/18/2009 2:44:28 PM , Rating: 2
People don't seem to like the Pre, Pixi and WebOS. While the tech sites and reviewers love stuff like this, and were looking very hard for something to counter the iphone so they'd have something new to play with and talk about, consumers don't feel the same way.

Reports of poor hardware, and the fact that WebOs isn't as user friendly as the iPhone OS in that you need to know how to use it before you can use it properly, which isn't true for the iPhone, turns people off.

In addition, they're making it difficult for developers, despite all the talk about it being "more open" than Apple's app process. 500 apps after all this time is another reason why people are staying way.

Their really bad advertising didn't help either.

The fact that it's on Sprint isn't an excuse. They could have sold twice the number, or four times the number if people liked it. The problem is endemic to the phones themselves. Sales at the UK's Q2 are below expectations as well.

Sprint has cheap plans because they losing customer is large numbers. They have to do something, and that's their choice.


RE: Not Unexpected
By omnicronx on 12/18/2009 5:36:50 PM , Rating: 2
quote:
People don't seem to like the Pre, Pixi and WebOS
Hmm that's funny, because I don't know one Pre owner that has been disappointed with their purchase.

Being tied exclusively to Sprint has hurt the Pre, there is no debating this. Like it or not, many peoples phone decision lies with the network that it is on. Even the 'great' iPhone has this problem, there are countless verizon users that won't jump ship because of the terrible AT&T network. For example Apple just dropped their exclusivity in France and their sales went up two fold. Same thing has happened in Canada with similar(but not as much) results expected.


RE: Not Unexpected
By bplewis24 on 12/19/2009 3:52:09 PM , Rating: 2
quote:
Like it or not, many peoples phone decision lies with the network that it is on. Even the 'great' iPhone has this problem, there are countless verizon users that won't jump ship because of the terrible AT&T network.


You just described me exactly. I was very interested in the Pre, but had refused to leave Verizon. In fact, even though my "New Every Two" Phone Upgrade kicked in back in July of 09, I had decided to wait to use it until January of 2010 to see if the Pre would come to Verizon's network.

When the Droid came out I decided to not wait any longer, and since it seems that Palm has doomed the Pre (and possibly the company's) long-term success by tying it exclusively to Sprint for at least the first 6 months, I feel I made the right decision.

Brandon


"We can't expect users to use common sense. That would eliminate the need for all sorts of legislation, committees, oversight and lawyers." -- Christopher Jennings














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