Palm's Pre Sells Briskly at Launch
Sprint Nextel Corp. and Palm Inc. enjoyed a weekend of lines and brisk sales for the Pre smart phone, but the biggest question now is how long they can keep the momentum.
The Pre, which went on sale Saturday, delivered on high expectations that positioned it as an iPhone rival, with analysts estimating sales ranged between 50,000 and 100,000 units. Now comes the tough task of sustaining that momentum by replenishing the sold-out stores and dealing with rising competition.
Apple Inc. can take the wind out of the Pre's sails with a major iPhone announcement Monday. Plus, Sprint only has a small window of exclusivity on Palm's WebOS software.
Share prices for both companies retreated Monday morning, likely as a result of the run-up in the recent months. Palm, up five-fold since the end of November, was down 8.4% to $11.92, while Sprint - up nearly three-fold in 2009 - was off 3% to $4.96. Both Apple and Research In Motion Ltd. saw their stocks rise ahead of key smart phone launches and then fall after the release date.
Still, the Pre remains the key to the longer term turnaround efforts by both Sprint and Palm. Soleil/Nelson Alpha Research Inc. analyst Michael Nelson estimates roughly 75,000 to 80,000 were sold over the weekend, with roughly 80% of sales going to existing Sprint customers.
"Although we expect most Pre sales to be to existing Sprint customers, we do believe Sprint has an opportunity to capitalize on the media buzz surrounding the Pre," he said.
Palm and Sprint weren't immediately available to comment on Pre sales.
The general consensus is that weekend sales were strong, but not "iPhone" great, with many noting that sales likely fell below the first Apple smart phone launch two years ago. Apple sold roughly 150,000 of the original iPhone in its first weekend.
Supply issues likely led to the lower sales numbers. Sprint Chief Executive Dan Hesse warned of shortages, and indeed there were many stores left with only a handful of Pre phones.
"The handset delivers but limited supply [is] curbing early uptake," said Maynard Um, an analyst at UBS. "Given the limited availability of the Pre at each store, we believe its impact on Sprint's post-paid trends will be muted in the second quarter."
Sprint and Palm will need to boost the available inventory to keep sales flowing. Last year's launch of the Blackberry Storm by Verizon Wireless was hampered by shortages and glitches, tripping up its early momentum. Still, the device went on to become a best seller.
Sprint and Palm, however, have a smaller margin of error, because so much is riding on the success of the Pre. That window is closing rapidly with other high-profile devices coming into the fold.
Palm wants to bring its WebOS operating system to other U.S. carriers, which means Sprint has a limited monopoly on what makes the Pre special. AT&T has signaled that it wants to sell WebOS phones, while Verizon Wireless Chief Executive Lowell McAdams insists that the Pre and a "cousin device" will be on its network in six months.
Following the iPhone are a number of high-profile BlackBerrys from Research in Motion, along with devices using Google Inc.'s Android operating system.
source
The Pre, which went on sale Saturday, delivered on high expectations that positioned it as an iPhone rival, with analysts estimating sales ranged between 50,000 and 100,000 units. Now comes the tough task of sustaining that momentum by replenishing the sold-out stores and dealing with rising competition.
Apple Inc. can take the wind out of the Pre's sails with a major iPhone announcement Monday. Plus, Sprint only has a small window of exclusivity on Palm's WebOS software.
Share prices for both companies retreated Monday morning, likely as a result of the run-up in the recent months. Palm, up five-fold since the end of November, was down 8.4% to $11.92, while Sprint - up nearly three-fold in 2009 - was off 3% to $4.96. Both Apple and Research In Motion Ltd. saw their stocks rise ahead of key smart phone launches and then fall after the release date.
Still, the Pre remains the key to the longer term turnaround efforts by both Sprint and Palm. Soleil/Nelson Alpha Research Inc. analyst Michael Nelson estimates roughly 75,000 to 80,000 were sold over the weekend, with roughly 80% of sales going to existing Sprint customers.
"Although we expect most Pre sales to be to existing Sprint customers, we do believe Sprint has an opportunity to capitalize on the media buzz surrounding the Pre," he said.
Palm and Sprint weren't immediately available to comment on Pre sales.
The general consensus is that weekend sales were strong, but not "iPhone" great, with many noting that sales likely fell below the first Apple smart phone launch two years ago. Apple sold roughly 150,000 of the original iPhone in its first weekend.
Supply issues likely led to the lower sales numbers. Sprint Chief Executive Dan Hesse warned of shortages, and indeed there were many stores left with only a handful of Pre phones.
"The handset delivers but limited supply [is] curbing early uptake," said Maynard Um, an analyst at UBS. "Given the limited availability of the Pre at each store, we believe its impact on Sprint's post-paid trends will be muted in the second quarter."
Sprint and Palm will need to boost the available inventory to keep sales flowing. Last year's launch of the Blackberry Storm by Verizon Wireless was hampered by shortages and glitches, tripping up its early momentum. Still, the device went on to become a best seller.
Sprint and Palm, however, have a smaller margin of error, because so much is riding on the success of the Pre. That window is closing rapidly with other high-profile devices coming into the fold.
Palm wants to bring its WebOS operating system to other U.S. carriers, which means Sprint has a limited monopoly on what makes the Pre special. AT&T has signaled that it wants to sell WebOS phones, while Verizon Wireless Chief Executive Lowell McAdams insists that the Pre and a "cousin device" will be on its network in six months.
Following the iPhone are a number of high-profile BlackBerrys from Research in Motion, along with devices using Google Inc.'s Android operating system.
source
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