Does Apple have anything to fear from the Palm Pre?

Will the Palm Pre be a worthy challenger to Apple's popular iPhone?

With CES behind us, one of the biggest surprises was the announcement of the Palm Pre, Palm's latest entry in the smartphone market.  Designed in part by Jon Rubenstein, a former Apple executive, the Palm Pre is a multi-touch screen phone with a pull out QWERTY keyboard that some pundits think has the best chance of challenging Apple's iPhone - but is there any truth to that statement?

First of all, Palm has to be given a lot of credit for delivering, by all accounts, a sexy looking phone that had a lot of people crowning it the best new product from CES.  ThePre sports a 3.1 inch screen, comes with 8GB of storage, has a 3.0 Megapixel camera, GPS, Wi-FI, an accelerometer, an extremely polished user interface, cut and paste (gasp!), EvDo , and even the ability to run applications in the background.  Not too shabby at all.  In fact, spec wise, this might give the iPhone a run for its money. 

But in today's smartphone market, hardware is fast taking a backseat to software in the minds of consumers, and Palm might soon find itself fighting an uphill battle in that regard.  The PalmPre runs webOS, a new platform that by all accounts is extremely intuitive and well-thought out.  The new OS is based in CSS, HTML, and Javascript, so there definitely won't be a shortage of developers capable of coding for it.  The only question is if developers will want to.

As I alluded to earlier, consumer expectations for phones have grown over the years.  In the past, a phone that played music and video was cutting edge, whereas now that capability is expected.  That said, and as Steve Jobs has mentioned as well, the differentiating factor between phones in the future will be software, and in that regard, the iPhone is already out to an extremely commanding lead.  Developers have seen the financial success possible via the iTunes App Store, and with over 10 million iPhones already in use, it might be hard to convince developers to code for the Pre.   It also doesn't help that Palm stated that its App Store will only be accessible over the air.  People can hate oniTunes all they want, but there's no denying that searching for and downloading media via your computer is a lot easier than doing it on your phone.  Of course, having the capability to purchase media from your phone is extremely convenient, but if that's the only possible avenue, the user experience will lagappreciably behind that of Apple's.

Other factors to consider when discussing the potential success of the Pre is that it will be tied exclusively to Sprint, which currently trails AT&T and Verizon in total number of subscribers.  Another factor is price -  When Peter Kafka of AllthingsD asked Palm CEO Ed Colligan if they would undercut the price of the iPhone, he responded, "“Why would we do that when we have a significantly better product?”

Gutsy.  I like that.  But a $250 Palm Pre, let's say, might not be that appealing to a customer also looking at a $199 iPhone with access to the already more than 10,000 applications currently in theiTunes Store.  Also,  while the Pre's slide out QWERTY keyboard is nice, BlackBerry already has that segment of the market on lockdown. 

The Pre is expected to launch in the first half of 2009, and will have to compete with the iPhone, the BlackBerry Storm, and the G1 in an already competitive smartphone market (sorry Instinct, but you don't make the cut).  To its credit, though, it seems that in developing the Pre, Palm wasn't angling for an iPhone killer.  So rather than mimicking what Apple has already done, they went off into some new territory, and came back with some intriguing new features like Palm Cards that will definitely make it an attractive phone for potential buyers.  All in all, the Pre looks great and extremely promising, but the iPhone is a freight train plowing through at 300 MPH, and it's extremely unlikely that the iPhone has anything to worry about.  RIM and Google's Android on the other hand...

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• App Store
• Apple
• Blackberry Storm
• CES
• iPhone
• iTunes
• Jon Rubenstein
• Palm
• Palm Pre