Six months after Palm Inc. started selling an unlocked version of its Treo Pro smartphone for $549, the company said Sprint Nextel Corp. will sell the device for $200 after rebates and a two-year service agreement.
Sales start March 15 at Sprint stores and a day later through Palm's online store.
The shipment news came one day after Palm officials issued a cautious preliminary earnings statement that partly blamed "later-than-expected shipments of the Treo Pro" for a decline in revenue in the third quarter, which ended Feb. 27.
The statement also said that "the challenging economic environment" and reduced demand for Palm's older smartphone products led to Palm's estimate that its revenue for the quarter will range from $85 million to $90 million, down from the same quarter a year ago.
However, CEO Ed Colligan said in the statement that the Palm Pre smartphone, built on the new WebOS that was announced in January, "remains on track" for shipment in the first half of this year. He said there has been "extraordinary response" to the Palm Pre and WebOS, which "reaffirms our confidence in our long-term prospects and our ability to reestablish Palm as the leading innovator in the growing smartphone market."
Last October, however, the Pre was months away from being announced, and some analysts were describing Palm's decision to sell the Treo Pro in unlocked mode as a desperation move. One analyst, Phillip Redman of Gartner Inc., said that selling the Treo Pro unlocked "looks like the final death sigh" for Palm.
Today, Redman said the move to sell the Treo Pro with Sprint is also a move of desperation. "It's not like you can take [the Pro] to many other carriers," he added.
Redman and several other analysts said that despite the Treo Pro news, all the market attention on Palm is on the upcoming Palm Pre. Gartner analyst Ken Dulaney said it's possible that Sprint, which will sell the Pre exclusively for a while, won that exclusivity partly in return for agreeing to sell the Pro as well.
"Everything depends on the Pre," Dulaney said. "Everything [at Palm] hinges on the Pre."
Nate Dyer, an analyst at Yankee Group Research Inc., said even though Palm officials claimed they were selling the Treo Pro unlocked so that GSM network users could use it in other countries without incurring heavy roaming costs, "it is still in Palm's best interest to get a carrier partner to subsidize the device." He called the price for the unlocked device at $549 "prohibitive" when just about every smartphone on the market is selling for either $99 or $199.
As for the financial message, Dyer said that Palm seemed to be indicating to analysts and investors to "hold on, give us another chance and a few more quarters to make things work out." He said the Pre will be entering a crowded space of smartphones that includes the iPhone, several BlackBerry devices, Windows Mobile devices and the G1, which uses the Google Inc.-supported Android platform.
"The Pre will have to be one killer device to make inroads, but luckily for Palm, it's not too late, and we're still early in the days of the smartphone revolution. I think Palm has a fighting chance," Dyer said.
Mike Akamine, Palm's senior product manager for the Treo Pro, disagreed that the Pro was shipping late to Sprint and said he had not seen Palm's financial statement issued yesterday mentioning that point. "We had it folded into the February time frame and in the end, high quality is what makes sense," he said.
He claimed that the Treo Pro "is meeting [sales] expectations" as an unlocked product sold to customers who want to use it overseas without facing roaming charges. Akamine also said the Treo Pro targets "very different customers" from the Pre. The Treo Pro, based on Windows Mobile Professional 6.1, will continue to draw from customers with Microsoft-based applications and device management.
In addition to the sizable difference in price from the unlocked version, the Treo Pro from Sprint will have Internet Explorer Mobile 6 for the first time as its browser, giving users options for mobile or desktop-like browsing, Akamine said. That version also supports the Flash video player.
The Treo Pro also comes with an on/off switch for Wi-Fi access to save on battery power and a removable battery that can support five hours of talk time, Akamine said. GPS is also supported as well as Bluetooth.
The device will operate over Sprint's CDMA 2000 EV-DO Rev. A network. An expandable memory slot supports Micro SD cards of up to 16GB. It also has a 2-megapixel camera/camcorder with an 8x digital zoom.
It also has a 1.74-in. touch-screen display and a QWERTY keyboard. It measures 4.49 by 2.36 by 0.54 in. and weighs 4.69 oz.