WIRELESS AND MOBILE NEWS

ChangeWave looked closely at the potential of Palm Pre sales in their recent study of consumer's expected smartphone purchases. Although the Palm Pre could breathe new life into Palm, the company has to overcome the obstacles of satisfaction ratings of Palm owners and perceptions of Sprint.

Researcher, Paul Carton wrote "Unlike its two industry rivals who attract consumers simply on the strength of their brand name, Palm has additional obstacles it will have to overcome for the Palm Pre to reach its full market potential."

Palm Pre vs. iPhone vs. BlackBerry Bold

Their survey took a close-up look at the early demand trends for the 2009 Palm Pre launch, and compared them to the early potential demand for both the RIM Blackberry Bold (2008) and the original Apple iPhone (2007).

Note that in each comparison looks at all consumers, not simply those purchasing in the next 90 days:

A total of 1% of consumers say they're Very Likely and 4% Somewhat Likely to buy the new Palm Pre in the future. This compares to 4% Very and 13% Somewhat Likely before the 2008 RIM Bold launch, and 5% Very and 11% Somewhat Likely before the 2007 original iPhone launch.

Who are the most likely buyers of the new Palm Pre? Current Palm customers of course, with 14% saying they're Very Likely and 23% Somewhat Likely to buy the new model. Beyond existing Palm owners, the Pre also shows the potential to attract customers from some competitors, particularly Sanyo (3%) and HTC (3%).

"And while early interest for the Palm Pre is less impressive than the early interest for the Bold or the iPhone, considering the enormous struggles Palm has had in recent years, the Palm Pre appears likely to breathe life back into the company if the new model performs even close to expectations," Carton commented.

He also noted,  "But above and beyond the Palm Pre's performance, Palm itself will have to outperform mightily going forward for it to be competitive in this race. Not only are they up against two industry giants along with a slew of lesser competitors, but they have to overcome widespread negative perceptions about their recent product lines and major concerns about their exclusive Palm Pre telephone service provider, Sprint."

Palm Pre Sprint Problem

The survey showed 17% of consumers say the most important reason they're not considering buying the Palm Pre is because they don't like the requirement to use Sprint. (We note, however, that the same percentage say they won't buy an iPhone because they'd have to use AT&T).

The bigger problem for Palm in the ChangeWave survey is that Sprint (10%) trails AT&T (31%) and Verizon (30%) by a huge margin in terms of current market share. Moreover, only 1% of consumers who are likely to change cellular service providers in the next six months say they'll switch to Sprint.

"Considering Sprint's weakness, the Sprint exclusivity deal is yet another big obstacle Palm will have to overcome as part of its Pre launch," wrote Carton

Only 31% of Palm's customers report they're Very Satisfied with their current Palm smartphone. Conversely, the Apple iPhone stands head-and-shoulders above the competition, with four-in-five owners (79%) now reporting they're Very Satisfied with their iPhone. RIM ranks a strong second with 50% of its customers saying they're Very Satisfied.

Thus even if the Palm Pre can outperform, it will take world class marketing and a huge advertising budget for Palm to rebuild its brand name in order to compete successfully in the high end smartphone market.

Carlton sumizes, "In spite of the obstacles, the Palm Pre shows real market potential, and it's no small feat to have stirred enough industry excitement to have nearly tripled Palm's stock price thus far in 2009---But considering the multiple issues Palm faces in order to pull off a successful Pre launch, expect high volatility for the stock going forward. A post-launch cooling in the Street's love affair with Palm is very likely in the offing."

For more information, visit: http://www.changewave.com