Why the Palm Pre Will Fail: Page 2

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The conventional wisdom is wrong. The Pre is not suitable for the business market, and it doesn't have what it takes to compete against iPhone in the consumer marketplace, either.

Which brings us to the smartphone power users. They tend to care more about power than beauty, and want to tinker. They're comfortable with complexity and want flexibility more than simplicity.

One reason Pre gets such good press is that the phone is targeted at precisely the kind of power-hungry geeks who write about phones on the Internet. Average users who think phones are too hard to use don't write gadget blogs. But they are the majority.

If you're salivating over the Pre, ask yourself: Are you a typical user? No, you're not.

Pre will capture power users, as well as Treo holdouts and a few people who really want an iPhone but are put off by the Kool-Aid-guzzling Apple fan cult.

So the Big Question is: Are there enough power users out there to drive the sales Palm needs to survive as a company?

"Gotchas" that will Wreck the Pre Party

Palm also confronts three "gotchas" that have nothing to do with the quality of the phone.

First, the Pre will be rare for a while . Yes, the phone launches June 6, but only in the US. And the number of units available for sale at Sprint stores, Best Buy, Radio Shack and a few Wal-Mart stores will be very limited. One analyst predicts fewer than 150,000 units units at launch. Best buy will reportedly average just four handsets per store!

By comparison, Apple sold some 270,000 iPhones on the very first day, a million within the first 74 days and more than 21 million to date.

What this means is that if I'm wrong, and the Pre is a runaway, mass-market hit, Palm won't be able to supply them fast enough. Palm needs a blockbuster success to survive, but cannot produce handsets at a blockbuster pace, at least for now.

The second major "gotcha" is that we're in a massive recession. People aren't buying phones like they would in better economic times. Sure, smartphone sales are up for the first quarter, but that's mainly because iPhone doubled it's marketshare over Q1 last year. Cold comfort for Palm.

And finally, we must remember that any comparisons made in the press between Pre and iPhone are between the future Pre and the past iPhone. The future iPhone, which will probably be announced within a week of Palm's Pre launch, may feature faster 3G, better exterior, more storage (32 GB!), better camera with auto-focus and video recording, built-in compass and will definitely include copy and paste, push notifications, multimedia texting, embeddable Google maps, landscape mode for all apps and tethering. Most of Pre's key differentiators will be erased.

The Pre will provide at least one major benefit for Palm, however: It makes the company a more attractive acquisition target. (Dell would be an ideal buyer.)

Look, I'm not here to bash the Pre. I think it's a fantastic phone, and for many users far superior to any other. It's just that no matter how much the power users love it, the Pre is not ready for business, can't top iPhone for consumers and is entering the market at the worst possible time.

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Tags: iPhone, cell phone, Palm Pre

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