It's not a fire sale, but it doesn't hurt to locate the nearest emergency exit, hydrant, or glass-encased ax.
Palm's (NASDAQ:PALM) Pre keeps getting cheaper. The revolutionary smartphone, introduced at $199 with a two-year Sprint-Nextel (NYSE:S) contract, has been going in for a flurry of haircuts lately.
- Sprint knocked down the price to $149 earlier this month.
- Amazon.com (NASDAQ:AMZN) chopped that down to $99 last week, briefly pushing the device to the top of its best-seller list.
- Not to be outdone, Wal-Mart (NYSE:WMT) is now offering the Pre at a mere $79 price point.
In short, it's been a September to dismember for Palm.
We still don't know whether the recent wave of price cuts is the result of Palm shaving its prices, or Sprint being willing to take a larger subsidized hit to move units. It may very well be a combination of both.
The sticker-price whacks are necessary. Apple (NASDAQ:AAPL) stole Palm's $199 thunder by marking down entry-level 3G devices to $99 just weeks after Palm hit the market. It also doesn't help that one analyst's concerns about fading Pre sales were all but confirmed by Palm's recent quarterly report, which featured a bleak outlook for the current quarter.
There were conflicting reports last week about whether Verizon's (NYSE:VZ) wireless group would introduce the Pre to its base. The cheaper the Pre gets through Sprint, the harder it will be for Verizon to make a dent without subsidizing the Pre entirely.
The silver lining here is that Palm's WebOS revolution doesn't end with the Pre. The sleek Pixi is on the way, and more devices will follow.
Palm still can't afford to play it safe. Every passing quarter finds Research In Motion (NASDAQ:RIMM) and Apple locking in millions of new smartphone shoppers to two-year contracts. Handset and computing heavies also want a little more skin in this game. However, the rat-a-tat price cuts have to confuse consumers, who are right to be reluctant in buying a Pre until they see the prices truly bottom out.
Until Palm and Sprint realize what a Pre is worth -- and stick to it -- it's a slippery slope to zero.
