Will Carrier Exclusivity Hurt Palm Pre?
The long-awaited Palm Pre was unveiled in January at CES. It is expected to come to the U.S. in the first half of the year -- with a June release date most likely -- and Canada in the second half.
As the clock ticks for Palm to get the Pre and webOS into users' hands stateside and Canadians get excited that they too are getting the Pre, via a deal between Palm and Bell Mobility, the hype surrounding the smartphone has reached epic proportions.
But Palm is taking an interesting track with the Pre, farming it out to only exclusive carriers. In the U.S., Palm has linked up with Sprint in an exclusive deal, while in Canada, Bell Mobility has exclusive rights.
Those exclusivity deals could ultimately hurt sales, thwarting Palm's hope that the Pre will be its salvation and pull it out of slumping revenues and declining device sales.
Sprint, for example, is battling slumping revenues and dramatic declines in subscriber numbers. In Sprint's first-quarter earnings report, the carrier suffered a net loss of $594 million. Additionally, its amount of traditional or "postpaid" service plans, which will soon include the Palm Pre, fell 17 percent from the same quarter last year.
In a recent consumer smartphone report, ChangeWave Research found that 17 percent of consumers aren't considering buying a Palm Pre because they don't like the requirement to use Sprint as the carrier. ChangeWave also found that Sprint lags in market share with just 10 percent, compared to AT&T and Verizon, which each have about 30 percent of the carrier market. Meanwhile, only one percent of consumers who said they are likely to change their cellular service provider in the next six months said they would switch to Sprint, while 33 percent said they'd join AT&T and 24 percent said they would switch to Verizon Wireless.
"Considering Sprint's weakness, the Sprint exclusivity deal appears to be another obstacle Palm will have to overcome as part of its Pre launch," Paul Carton, ChangeWave research director, said.
Also working against Sprint are the continued delays in the Pre's release, which has some potential buyers growing restless as they wait for the smartphone to hit stores.
While Sprint will be the Pre's exclusive U.S. carrier, Palm also announced this week that in Canada it has inked an exclusive deal with Bell Mobility, which will carry the Pre on its 3G network.
By most accounts, Bell Mobility is the top choice to bring the Palm Pre to Canada because of its powerful 3G network, but in selecting Bell Mobility in Canada, Palm turned its back on Canada's two other wireless powerhouses, Rogers and Telus. Telus could easily support the 3G Pre. Rogers, on the other hand, focuses most of its efforts on the Apple iPhone, but is still one of the top carriers in the country.
Still, Palm's Bell Mobility deal could also work against Pre sales. There are some parts of Canada not covered by Bell Mobility, including Manitoba, meaning some potential Pre users could be left in the dark by Palm's carrier choice.
So far, neither Sprint nor Bell Mobility has unveiled a price for the Pre.
Despite the potential carrier shortfalls, the smartphone market is eagerly awaiting the Palm Pre and the webOS operating system.
The 3G Pre offers a large 3.1-inch touch screen with a full slide-out QWERTY keyboard. The webOS operating system uses a new technology dubbed Palm Synergy, which converges contacts into a single address book from various sources such as Google Gmail, Microsoft Outlook and Facebook. In addition, with webOS, the Palm Pre can run several applications at once without requiring users to log out of one to work in another.
Other features of the Palm Pre smartphone include Wi-Fi, GPS, Bluetooth, 8 GB of memory and a 3.0-megapixel camera with an LED flash.