When, oh, when will palmOne (Nasdaq: PLMO) get it right?
Not soon, apparently. Last Wednesday, the company announced it would offer its new Treo 650 smartphone for $599 without any wireless service commitment. Then it upped the price by $100 the next day, calling its original pricing plan a mistake, according to a News.com report.
A mistake? C'mon, guys. This wasn't a boo-boo that can be covered up with the corporate Band-Aid of slick marketing and PR. This was a bona fide screw-up. Huge. I mean, really, what's the first thing you do after you create a new product for a mass market? Yep, that's right, you price it. palmOne had to know months ago what they were going to charge. How could they not get it right at launch?
It's a question customers are apparently asking, too. They're not happy, and they've let the company know exactly how they feel. News.com reports that the reaction was so strong that palmOne quickly assured customers who bought before the increase that the price they locked in would be honored.
What troubles me the most is that this knee-skinning overshadows what looked to be an otherwise strong rollout for the 650. For example, a deal with Cingular Wireless -- a joint venture between SBCCommunications (NYSE: SBC) and BellSouth (NYSE: BLS) -- could put the Treo in the hands of up to 49 million subscribers for a two-year service commitment and $449 up front. palmOne already sells the Treo through Sprint PCS.
A strong launch is critical because as goes the Treo, so goes palmOne. The company has bet its future on the smartphone, hoping to use it to boost growth and offset a steep decline in the handheld market it has dominated for years. But that won't be easy: There are plenty of competitors to the Treo, and some of them are available at a substantial discount. Take Research In Motion's (Nasdaq: RIMM) new 7250, which was launched yesterday. No, it doesn't boast the camera, MP3 player, or Bluetooth compatibility found in the Treo, yet it does feature Web access, e-mail, and phone service all in one package. Inking a two-year service deal with Verizon (NYSE: VZ) will get you the device for at least $100 less than the 650. That's why "oops" simply isn't an answer palmOne can afford to give its investors right now. Or maybe ever.
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Fool contributor Tim Beyers thinks palmOne is doing everything it can to blow it in a market that's too competitive for mistakes. Do you disagree? Fine. Share your take with other Fools at the palmOne discussion board. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in Tim's portfolio and check out his Fool profile here. The Motley Fool has a disclosure policy.
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