Best Buy's Palm Pre price a steep $849, possibly to deter advance purchases

Sprint CEO warns of shortage as smartphone launches June 6

The Palm Pre, which goes on sale June 6 from Sprint Nextel Inc., is already appearing on the Best Buy Web site for a whopping $849.99, several times above the $200 price after a $100 rebate that Sprint had announced.

Sprint and Best Buy Co. couldn't be reached immediately to comment, but bloggers speculated that the Best Buy online price had been set artificially high to discourage Best Buy employees and other customers from reserving a purchase in advance because of concerns that there will be a shortage of Palm Inc.'s new smartphones at the time of the launch.

The expected shortages were clearly described by Sprint's CEO, Dan Hesse, at an investors' conference earlier this week, according to reports.

"We don't intend to advertise it heavily early on because we think we are going to have shortages for a while," Hesse said, according to Thomson Reuters. "We won't be able to keep up with demand for the device in the early period of time."

Some of the Pre's early fans were angered by the high price and by the possibility that Sprint and Palm would allow the Pre to go on sale if it was in short supply. In a comment on the forum EverythingPre, someone identified as AldoJr said, "One step closer, two steps backwards."

Some analysts said Palm and Sprint deliberately scheduled the launch on the Saturday that falls two days before Apple Inc.'s Worldwide Developers Conference, where more is expected to be revealed about the iPhone 3.0 software and possible iPhone hardware upgrades.

Both Sprint and Palm could use a boost, even if it is only transitory, given their financial pictures. Moreover, the smartphone market will be busy this summer, with highly anticipated iPhone and Pre launches as well as expected announcements from Research In Motion Ltd., Nokia Corp. and several Android phone manufacturers.

"Preempting the iPhone news was a good idea because waiting to release the Pre after the iPhone news would have meant it would not get attention for many weeks, with iPhone garnering all the attention," said Jack Gold, an analyst at J.Gold Associates LLC. Sprint also is probably not selling many of its other Palm devices and wants to get a jump on back-to-school sales in August, Gold said.

Gold also questioned whether Sprint and Palm have a shortage of Pre devices, especially given the way Hesse came out and bluntly described a shortage. "When you say those things, that we won't have many of these Pres on sale, it is saying, 'So, if you want one, get in line right now,'" Gold said. "It's reverse psychology, and it makes it sound like an exclusive item if you can't get your hands on one. So I'm not sure they do have an actual shortage."

Plus, if problems develop with supplies or activations, Sprint can be seen as having warned buyers, he added.

Copyright © 2009 IDG Communications, Inc.

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