Analysts deem Palm launch a success; Pre inventory replenishment eyed
Updated: Analysts called the Palm Pre launch a success, but supplies were tight.
Piper Jaffray analyst Michael Walkley deemed the initial Pre sales "solid." And J.P. Morgan analyst Paul Coster reckoned that most Sprint stores he called were sold out. Some reps claimed that the Pre was sold out nationwide. The rub: Stores didn't carry many Pre devices at launch.
CNet News' Maggie Reardon reported that Sprint's flagship Manhattan store had 200 units to launch. A Best Buy at 23rd Street in New York had 40 to 48 phones. Bloomberg put Sprint's Mission Street store in San Francisco with an inventory of 60 phones. Chicago stores carried 30 to 50 Pres.
Coster said some Sprint stores expected more Palm Pres to arrive this week, but most reps were unclear. Coster wrote in a research note:
Most Sprint representatives were unclear on when additional Pre units would be delivered, and in what quantity. Some suggested that new units would be delivered this week, with answers ranging from Tuesday (Boston) to Thursday (Los Angeles).
Add it up and the Palm launch was about as expected:
We conclude that the launch of the Palm Pre has probably been successful. Sales in the first two days probably exceed 50,000, which aligns with our expectations, but sales are very probably short of the 146,000 reported for the first generation Apple iPhone, owing to capacity constraints in manufacturing (or imposed by PALM’s balance sheet). We believe the 'soft launch' is probably proceeding to plan. To be reassured, we need to see Sprint channel inventory replenished this week.
Morgan Keegan analyst Tavis McCourt said:
At least from our point of view, the Pre launch was a success, although supply was clearly limited. We believe a good estimation of Pres sold over the weekend is in the 100k-150k range, but sales probably could have been 2x this with enough supply. As a point of reference, the iPhone 3G sold nearly 1 million in its first weekend with ample supply. We expect supply of Pres to hit Sprint stores this week and for distribution to be more or less fully stocked with inventory by July/August. For the August quarter, we have assumed sell through of 500k Pres and sell-in of 650k, both of which look very reasonable after the first weekend. The next few weeks will be crucial for Palm, as any shortcomings with the OS, if there are any, would be brough to light.
Once Palm rebuilds that Pre inventory we'll get a better picture for ongoing demand.
Walkley wrote:
By Sunday, our checks indicated the majority of stores had sold out of initial quantities. Overall, we believe sales were slightly less than our initial expectations of 150-200k units selling over the weekend.