Sprint Nextel Corp. (S) and Palm confirmed that their eagerly anticipated smartphone, Pre, will hit stores on June 6. That's just a few days before Apple is expected to unveil its next iPhone, which is sold exclusively through AT&T Inc. (T).
The stakes are high for Sprint and Palm. Palm badly needs a hit device to turn its fortunes around, while Sprint continues to see an exodus of subscribers. Both view the smartphone as the key to their turnarounds. The Pre, meanwhile, has a lot to prove as it seeks to capture some of the success that the iPhone has had over the past two years.
Sprint Chief Executive Dan Hesse stoked the hype early Tuesday, saying he expects high demand.
"We'll have shortages for a while," Hesse told analysts during an industry conference on Tuesday.
The Pre will cost $199.99 with a two-year service agreement and after a $100 mail-in rebate. Collins Stewart analyst Ashok Kumar said earlier this month the Pre could be a huge flop if Sprint wasn't able to match or price below the $199 price tag on the iPhone.
Kevin Packingham, who runs product and technology development for Sprint, said the Pre is "extremely competitively priced."
Of course, the next iPhone could come out at a lower price, which would effectively halt any consumers looking to jump carriers for the Pre. Apple and AT&T slashed the price of the device by $200 a year ago. There's also the risk that the phone's launch could get drowned out by the hype surrounding the iPhone.
A spokesman for Apple couldn't be reached for comment.
Sprint shares recently rose 8 cents to $5.40.
Palm shares fell nearly 5.1% to $11.45, partly on concern that the Pre could face quick competition from the iPhone, but also on fears that the early shortage Hesse hinted at suggests lower unit sales.
Palm marketing head Brodie Keast declined to comment on the stock movement.
Both Palm and Sprint said the iPhone didn't factor into the timing of the launch.
"We really didn't look for any outside influence," Packingham said.
On the iPhone, he said: "We want customers to compare each device."
Palm's Keast said, "Ultimately, it was Sprint's call.... We just wanted to ship this thing when it was ready."
Macquarie Securities analyst Philip Cusick estimates that Palm could sell 100, 000 units in its fiscal fourth quarter ending this month, up from a prior estimate of 50,000. He was a bit less optimistic about the Palm's early success after Hesse's comments.
Sprint said Tuesday the phone would be sold at Best Buy Co. (BBY), RadioShack Corp. (RSH) and some Wal-Mart Stores Inc. (WMT) stores. It will also be available through Sprint's Web site.
Sprint hopes the Pre will act as a strong retention tool for the company. The carrier has lost more than 6 million subscribers in the last six quarters.
The Pre should blunt some of the losses, according to Cusick. He estimated that Sprint would lose 1.1 million contract customers in the second quarter, narrower than the loss of 1.25 million in the first quarter.
[Originally posted by Kerry Grace at money.cnn.com]
