Pre price cut not necessarily a sign of poor sales 13
Wed, 16 Sep 2009 9:13 am EDT 
While it’s clear that the Pre hasn’t sold quite as well as Palm and Sprint had hoped, that recent $50 price cut that hit the Pre isn’t necessarily a sign that the phone has sold much worse than expected and they have excess units on hand they need to move. As Computerworld notes that price cuts are a fact of life in today’s cutthroat technology market. On the same day that Palm revealed the Pixi and cut the Pre to $150, Apple cut prices on the iPod Touch. With the rate that technology is developed these days, it’s no surprise that prices get cut regularly. They say that once you leave the store with your new computer it’ll already be outdated; the same can be easily said for smartphones.
Most analysts have maintained that the Pre is selling well. In fact, Ramon Llamas of IDC market research said that “If you want to see inventory really move, then price the smartphone below $100.” To him, the price cut is a sign that Palm and Sprint are positioning themselves to be competitive against the $99 iPhone 3G going into the holiday season.
Analyst Jeffery Kagan agreed, saying, “No one Palm device will be a major breakthrough for any single carrier, and there might be modest sales from every carrier, but taken altogether those sales will show that Palm can be a strong company again.” Of course, first Palm has to get the Pre and Pixi (or other webOS phones) onto other carriers.
Thanks to Daniel for the tip!
13 Comments
Hhhhhmmm interesting, very interesting. Its true tho, that's why video game systems have price cuts too, its all about competition.
I wouldn't read anything about the success, or failure, of the Pre by a price cut, especially given what happened with the iPhone's price quickly after its quite successful launch. It's just the nature of the cellphone, smartphone and computer markets: prices drop sharply soon after launch, regardless of how well a product may be selling. Especially with cellphones/smartphones, where the revenue model for both manufacturer and carrier relies not only on purchase but service plans, there is serious flexibility built into the hardware purchase price to begin with. {Jonathan}
Lets not confuse iphones. The original iphone which came out 2 years ago, recently dropped to $99 this summer. The new iphone which debued along with the Pre this past spring has held firm in price while the Pre did a price cut. Companies don't make price cuts as long as demand is exceeding supply. Marketing 101.
Are you suggesting that there was significant reduced demand for the original iPhone when Apple dropped its price by 1/3 68 days after its initial launch? This article says the same things about that iPhone that are being said now about the Pre, but today the iPhone is held up as the gold standard for unflagging consumer desire:
http://business.timesonline.co.uk/tol/business/industry_sectors/technolo...
That first iPhone is the right metric, since it (like the Pre) was the only such model in the maker's stable at the time. Nothing below above it to push it down; nothing below it to prop its price up. {Jonathan}
The first sentence of this article states the Pre isn't selling well. I don't remember Precentral publishing a story on sales numbers? Sprint and Palm both said they are happy with sales. No specific numbers. So if Palm is happy but precentral.net says sales are under par, what is the real story? Are sales good or bad?
As best as we can tell, sales have been adequate, but not the break-out hit that Palm and Sprint had hoped for.
I still believe Palm will have a much better chance once they fill in the MANY missing features of webOS. No Treo should have any feature advantage over a webOS device. Unfortunately, they currently do. Treos have video recording (a big deal for some customers), more robust PIM functions, and a large application based. Palm certainly seems to be making efforts to increase the webOS application base, but their silence regarding the PIM functions gives some customers pause and reluctance to purchase.
Palm needs go faster than their current glacial pace to fill in the many missing features.
WHY CAN WE STILL NOT SELECT THE NOTIFICATION SOUND???
Are you all going to make this comment on every article? I mean I get it, you want those features (who doesn't), but come on. And you're calling this pace (OS version from 1.0 to 1.2 in like 3.5 months) glacial? Seriously? I think that you should calm down a bit and get some perspective.
To answer, yes, I call it glacial considering many of the missing features are expected (by some of us) in any 1.0 product. Add to that, regardless of how many years the Treo and iPhone have had to get to their current state, the Pre does not have the luxury of waiting the same number of years to become competitive. Is this fair? No, not really. Is this reality? Yes, unfortunately it is. webOS is competing against a three year old iPhone OS and a thirteen year old Palm OS (Garnet).
I agree they need to get the pre and the pixi out in the gsm market like day before yesterday. The fact the European lanuch has not yet been announced is very disconcerting. Palm is shooting themselves in the foot yet again by not getting it out in gs m falvor and to me IMHO they should have at least gotten the pixi out in GSM before they announced it for Sprint. In my area Sprint has poor coverage and I would never switch. TMO is new in the area as is Verizon (only here bc they bought Alltel). I have been with ATT for many more years than I can remember and have no desire to switch I like what I have seen on the pre and the pixi format I like better but I also like what I see on the touchpro2 and the hero and if they come out in my area in gsm format I may not be willing to wait for Palm to get around to gsm devices.
It's funny that the price happened with Sprint. When the Pre goes to Verizon you will see a job in sales People need to understand that Palm is a following just like Apple. It been my experience that Sprint just is not a big player in the smartphone category. Had the Pre been launched on Verizon it would have had an impact, but Verizon made a mistake with the Blackberry Storm. The Storm has made a lot of Verizon customer jump to the Iphone.
The Iphone is a great phone, but its going to be in the same light as the Blackberry. When the Blackberry first hit the market everybody had to have one, but now its the Iphone. Palm will always be a Solid player, because everyone knows the Palm name.
Once the Pre is on the Verizon network things will change! You heard it first. Verizon will transform the Pre!
I feel the same way! Sprint has some pretty awesome apps and a terrific plan offering, but their service is very spotty in my area. I love my 755p on VZW and can't wait till the Pre comes to Verizon next near!!
I don't understand why a $50 price cut is even news when you take into account the fact that the minimum service plan is $70/mo. The phone essentially IS free compared to the price of the 2 year contract! I suppose the cost of the phone may be important to short-sighted buyers, but for those who can look more than a few days ahead, the cost of the phone itself is negligible.