Palm may have gotten the design, operating system and marketing right with its much-anticipated new phone, the Palm Pre. But its decision to launch the Pre on Sprint's network could prove to be the weak link in the chain.
Sprint said Thursday it lost 1.3 million subscribers in the fourth quarter and posted a loss of $1.62 billion. As the company bleeds money and users, the question is whether people will be willing to switch over from another carrier to go with Sprint, even if the carrier has one of the year's most-hyped phones.
"They (Sprint) are the third place carrier, not doing well and losing customers left and right," says Jack Gold, president and principal analyst at consulting firm J. Gold Associates. "I don't see a rush of people ditching Verizon and AT&T to go to them." Users' unwillingness to pay hefty cancellation fees to go to Sprint could also take a toll on Pre sales, he says.
For handset makers, the telecom service provider can be a powerful partner — or a heavy burden. Take Research In Motion's BlackBerry Storm touchscreen phone. The device launched in November on Verizon Wireless' network and met with some very harsh reviews. But two months later, Verizon announced it sold more than one million units of the phone. Verizon's position as the largest cellphone service provider in the United States, its strong promotion of the phone and the loyal BlackBerry fan base, contributed to the Storm's success despite the many negative reviews of the device, said analysts.
Palm could do with that kind of muscle for the Pre. But it may not have had much of a choice but to partner with Sprint. Over the years, Palm and Sprint have built a symbiotic relationship; the $100 Palm Centro has had a successful run on Sprint. And now Sprint needs the Pre to lure customers.
It won't be easy. The weak economy could rain on Palm and Sprint's plans. "It's the biggest problem in the short term for them," says Gold. "Are people going to pay the cancellation fee to go to Sprint?"
Sprint's best hope for a switch is likely to be from current Palm users, such as Jim Egly. Egly, who works as a sales executives with a computer support firm, is a Centro user on Verizon. But he says he will consider a switch to Sprint just to get his hands on the Pre.
"Pre looks like such a sweet piece of technology," says Egly. "And I have a loyalty to Palm."
Also see:
6 Reasons Why the Palm Pre Is Special
Palm Unveils Its Long-Awaited Smartphone, the Pre
Video: Hands-On With the Palm Pre
New WebOS Is Palm's Secret Sauce
Up Close and Personal With the Palm Pre
Photo: Jon Snyder/Wired.com
