Pre selling well as rivals ready to launch

 

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By Matthew Sparkes

Posted on 17 Jun 2009 at 14:12

Sales of Palm's closely watched Pre are running on track with, and exceeding some Wall Street expectations after just over one week.

But analysts said it may be too soon to tell if the initial excitement will be dampened by new smartphones from Palm's bigger rivals: Apple's iPhone 3GS starts selling on Friday and the BlackBerry Tour is expected in coming months.

While Palm has yet to comment on the pace of demand, most analysts, citing their own data, said the company shipped some 50,000 units for the weekend of the Pre's debut on June 6. Another 50,0000 units followed soon after.

Pacific Crest Securities analyst, James Faucette, said sales to consumers so far appears to be stronger than anticipated.

"We believe that between 90,000 units and 100,000 units were sold in the first week," he said. "Given the high number of people still on waiting lists... the company appears to be on track to exceed our previous August quarter unit shipment estimate of 500,000."

The successful launch of the Pre smartphone is seen as a badly needed shot of adrenaline for Palm and exclusive provider Sprint Nextel Corp.

David Eller, analyst at JRPG, a boutique securities firm, said Palm sold 84,000 Pre phones in the first weekend, with some 35% going to new customers for Sprint.

Palm is scheduled to report earnings on June 25, when Jon Rubinstein, who last week was named as the company's CEO, may shed some light on the Pre's progress as well as potential addition to the Pre family of phones

With a touchscreen control, slide-out keyboard and operating system designed for trendy web services such as social networks, the Pre has garnered mostly positive reviews.

Sprint said it had record sales of the smartphone in its first weekend, and was restocking the phones "as quickly as Palm could make them.

"Pre shipments seem to be tracking our expectations, and there is still pent-up demand, assuming [consumers put on waiting lists for handsets] can be converted into purchases," said J.P. Morgan analyst, Paul Coster.

Shares of Palm climbed on Tuesday to their highest level since October 2007, rising 3.2% in afternoon trade to $14.57, after hitting a session high of $15.25.

Palm Pre's moment as the new kid on the block will last only about two weeks, with the arrival of the iPhone 3GS this Friday.

RIM also unveiled the Tour, the newest Blackberry, on Tuesday but did not give a launch date. It is expected to be popular with business customers since it can easily access voice and data services on networks internationally.

Analysts suggest that demand should be strong for all three devices, as more and more consumers migrate to smartphones. But Tavis McCourt of Morgan Keegan says it may be hard for the Pre to convince current smartphone users to switch.

"We continue to believe the Pre will be wildly successful at Sprint, although we don't believe it will cause meaningful iPhone or BlackBerry defections due to its lack of third party apps to draw away iPhone users or enterprise capabilities to draw away BlackBerry users," he said.