Summer soap opera: Palm Pre, Apple iPhone, Android army usher in "smart" age

This summer's "most compelling phone drama" will begin the first week in June when Sprint will finally -- finally! -- begin selling the Palm Pre.
Written by Andrew Nusca, Contributor

This summer's "most compelling phone drama" will begin the first week in June when Sprint will finally -- finally! -- begin selling the Palm Pre.

In an article in today's New York Times, Palm is portrayed as "a once-iconic device maker" that has "fallen on hard times" and hoping that the Pre hype started way back at CES 2009 in January -- and the high stakes bets placed on the device by Palm and Sprint Nextel, which has exclusive rights to the phone in the U.S. -- start paying out.

"This is make or break for Palm," said [industry analyst Charles] Wolf, noting that Palm, also the maker of Treo and Centro phones, lost about $98 million in the last quarter, consistent with losses in other recent quarters. "It's not make or break for Sprint, but clearly Sprint is in trouble, too, and needs a hit."

Palm's singing a slightly different tune, playing down the importance of the Pre itself, positioning it more like T-Mobile did with the G1, as the start of a family of devices:

"The Pre isn't a bet-the-company device," Ms. Fox said.

Problem is, with those kind of balance sheets from Palm and Sprint, it really is.

Compounding the problem is a crowded summertime launch schedule. It's been pretty darn quiet in the smartphone release mill lately, in preparation for the summertime blitz of new phone launches, of which Palm's Pre is just one. (Why, you ask? Two consumerist phenomena: Back-to-school and the coming holidays.)

Come to think of it, for a company prescient enough to take advantage of the mobile vacuum at CES 2009 to have a full stage for a launch, it's a wonder why Palm waited until what amounts to rush hour to complete the trip.

The good news? There are an awful lot of "dumb" and "feature" phones out there that need replacing. Of the four billion mobile devices in the world, only 100 million are smartphones. That's a lot of unsold data plans waiting in the wings.

According to analysts in the Times article, a mobile phone flop "will sell fewer than 100,000 units," while a hit "at least one million" (a runaway success? "Five times that or more"). As you might infer from that language, Apple's iPhone has sold more than five million.

As in summers past, this season is expected to produce a new, third-generation iPhone with an upgraded camera, a faster processor and better GPS.

To boot, Samsung plans to release the Google Android-based i7500 smartphone overseas this summer, echoing moves by HTC and Motorola for that operating system.

Not to be left out, of course, isWindows Mobile 7 (er, 6.5, that is), an operating system that's been met with less than favorable response and isn't widely considered to be a strong move on Microsoft's part.

So: is this summer "make or break" for smartphones? You bet. With Android, iPhone, BlackBerry (Storm 2, anyone?), Palm webOS and Windows Mobile offerings, we have the beginnings of As The World Turns, mobile edition.

That means more competition in pricing (more crowded market = thinner margins), hardware features (more OSes in the game) and carrier plans (now every carrier has at least one flagship phone worth talking about).

Goodbye dumb phones, hello smartphones. Smart is the new dumb.

The only downside? That pesky data plan.

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