Did Apple Steal the Palm Pre’s Thunder?

I must admit, I am quite taken with the Palm Pre. The hype, predictably, has been enormous. And the handset itself is very well put together. Online reviews rave about it. After playing with my friend’s new Pre, I have to agree with them: it is one cool handset.

But before the Pre could bask in the media spotlight for long, Apple (AAPL) whooshed in two days later to announce its newest iPhone, the 3G S, and that the 3G would sell for as little as $99.

So how has this move affected overall interest in the Pre?

This chart shows the percentage of people viewing the Palm Pre who also looked at the Apple iPhone 3G S online in the same week. Interest in the Pre is defined here as anyone who looked at a Pre-related webpage hosted by Palm or Sprint (S) (or both). Similarly, interest in the iPhone 3G S includes anyone who viewed iPhone 3G S-related web pages at Apple or AT&T (T) (or both). Before the announcement of the iPhone 3G S, interest traffic for the iPhone represents the iPhone 3G.

Here we see that:

• Before the iPhone 3G S was officially announced on June 6th, only about 2.5% of people who looked at the Palm Pre online also viewed the iPhone 3G
• However, once the iPhone 3G S announcement was made, traffic to the iPhone 3G S by Palm Pre shoppers jumped 104%, signaling that the Pre definitely had to share the limelight with the new iPhone 3G S
• By the time the iPhone 3G S was available, just a week after it was announced, consideration of the device by Palm Pre shoppers dropped by about 25%

While the decrease in cross shopping seems to suggest that the iPhone 3G S will not continue to distract Pre shoppers, handset interest data shines a different light on the situation. Interest in the Pre predictably shot up during the week of its launch and the week after as marketing efforts and press coverage reached a fever pitch. However in the second week after launch, Pre interest dropped sharply to levels it had prior to launch, as shown in the chart below.

This suggests that the Pre may indeed have lost its thunder online, though it is unclear at this point if interest has transferred to the iPhone 3G S or simply faded away. Certainly, consideration of both models decreased after the initial excitement of the Palm Pre’s launch and the iPhone 3G S announcement passed, which could indicate that distinct fan bases have emerged for each phone.

Still, much remains to be seen over the next few weeks, as each phone works to establish and sustain its fan base. There are also more opportunities to drive online interest in the Palm Pre to counter the iPhone. Selling the device online is one possibility. Encouraging development of more applications to rival the iTunes App Store by releasing the software development kit more broadly (which Palm says they will do “by the end of this summer”) could also entice consumers.

Challenging the iPhone’s dominance is no small task, but we’ll be watching over the next few months to see if the Palm Pre is the device that will rise to the occasion.

Comments

[RayDong:]

I've read reports that the Pre has sold over two times as many units as projected. Additionally, it's a good device with a far cheaper plan that AT&T's. The only appeal of the IPhone is the fact that all it's owners hold it up and announce that they have an IPhone.

Jul 01 12:38 PM

[SiliconVall...:]

This is an article discussing the interest level in Pre and iPhone 3GS and whether there is any meaningful interpretation in the changing patterns before, during and after their events. Scientifically speaking, without more data clarifying how the charts were created, the whole article is just aimless chit chat.

Jul 01 12:44 PM

[Buffeted:]

Your question ignores the real issue behind any meaningful comparison between the two. What Apple has achieved with the iphone and the app store is the same thing they achieved with the ipod and itunes: A platform + contextuality. The superior operating system of iphone, design, speed etc. is all secondary to the perception of the iphone as an exclusive window to the app store and itunes experience. The pre gives you the internet in your pocket experience, but that's it! When companies start REALLY getting that, they will compete, but then there is still the unity of apple os that connects ALL of there divices that will be the next hurdle for competitors.

Jul 01 12:58 PM

[makelvin:]

I think it is unfair to say that Apple stole the thunder from Palm. Virtually everyone knew Apple was going to announce the new iPhone at the Software Developer's Conference on that date. Palm chose to launch their Pre a couple days before the announcement of the new iPhone to try to steal the new iPhone thunder from Apple; but as it turns out, it completely back fired on them. They should have known better.

Jul 01 02:03 PM

[Rg2:]

An institutional investor is betting big that Palm's phenomenal rise over the past few months will continue. Funds that hold the family fortune of deceased publishing magnate William Ziff Jr. have added to their stake in the smartphone maker by three million shares over the past five months, and now hold about 6.5% of the company. --Barron's, 7-1-09.

Apple stole Palm's thunder?

Jul 01 04:25 PM

[peter02l:]

This is very enlightening given the fact that neither Palm nor Sprint ever announced projected sales number and they have not release any number for sold units.


On Jul 01 12:38 PM RayDong wrote:

> I've read reports that the Pre has sold over two times as many units
> as projected. Additionally, it's a good device with a far cheaper
> plan that AT&T's. The only appeal of the IPhone is the fact
> that all it's owners hold it up and announce that they have an IPhone.

Jul 01 08:56 PM

[peter02l:]

That was a cheaper way to help Elevation Partners create the impression that the company is worth something. If they can get a buyer, both will benefit. Anyone in UAE interested? It matches any Benz interior beautifully.


On Jul 01 04:25 PM Rg2 wrote:

> An institutional investor is betting big that Palm's phenomenal rise
> over the past few months will continue. Funds that hold the family
> fortune of deceased publishing magnate William Ziff Jr. have added
> to their stake in the smartphone maker by three million shares over
> the past five months, and now hold about 6.5% of the company. --Barron's,
> 7-1-09.
>
> Apple stole Palm's thunder?

Jul 01 09:02 PM

[CGP:]

<<Did Apple Steal the Palm Pre’s Thunder>>
<<The superior operating system of iphone...>>
- One sided Apple viewpoints/bias, how about some objectivity?

- I think consensus from most observers (pro, con, whatever) well before any Apple announcements, was that Palm intentionally scheduled their release to coincide with Apples' annual WWDC, so how did Apple steal their thunder? - speculation, probably true, is that Palm wanted to piggyback Apple publicity

- How about citing polling methodology, sample size etc.?

- It would seem Palm management has planned this rollout and would seem to be succesfully executing for the most part (increased stock price, well reviewed product, "buzz").

Jul 02 03:31 AM

[brewer:]

How was this data acquired? With browser cookies? Palm's success is yet to be seen. I think the market wants a competitor to the iPhone, but I'm not sure we have one yet.

Jul 02 09:18 AM

[Tom B:]

There's ONLY thunder with the Pre; no substance. The device has numerous, obvious flaws: 1) no real OS; just web widgets 2) physical keyboard 3) Palm has an awful track record on device reliability-- I know; I've owned 4 Palm devices. I also have several friends who hated their Treo's. I'd put the Pre's chances somewhere BELOW not just the iPhone, but Android and RIMM.

Jul 02 09:57 AM

[mollytjm:]

i agree about Palm...their Treo was so glitchy and they never really fixed it. They are very slow at innovation and that doesn't bode well for a tech company these days.
I think the move to sell an iPhone for $99 was a good one and also made a difference in market share.
as far as the stock...Palm is still a one trick pony that doesn't adapt quickly and is iffy in the long run. APPL is a much better buy.....even RIMM is.

Jul 02 10:17 AM

[EJL:]

All you folks are getting mired in minutia, and nearby lives myopia. The Palm Pre is good enough to sell enough devices to make the company profitable. For example, if Palm makes about $200 gross profit per phone (cost around $170-200, ASP at least $370, if not higher) then 1 million phones per quarter equals about $800 mln gross profit, which leaves them plenty of money for SG&A, R&D, and some profit.

The smartphone is a growing subset of the industry with only about 13-15% of total annual mobile device sales now. Imagine when the percentage is higher AND the total number of units is higher over time. The bottom line is that the rising tide will lift all boats, and the Pre is a decent enough boat to participate.

My personal opinion, the Pre is neither an iPhone for that gooey UI and media/apps consumption, nor is it anything close to the Blackberry for messaging/communication (MVS?) and security. SO where does it leave it? Selling a few million phones each year to consumers/small businesses as just another option out there.

Jul 02 02:45 PM

[Tom B:]

Ford sells a lot of cars every year, too. Doesn't make the company a "buy" in my view. Why assume extra risk on a company that is clearly not a leader? Non-leaders are highly vulnerable, especially in tech.


On Jul 02 02:45 PM EJL wrote:

> All you folks are getting mired in minutia, and nearby lives myopia.
> The Palm Pre is good enough to sell enough devices to make the company
> profitable. For example, if Palm makes about $200 gross profit per
> phone (cost around $170-200, ASP at least $370, if not higher) then
> 1 million phones per quarter equals about $800 mln gross profit,
> which leaves them plenty of money for SG&amp;A, R&amp;D, and some
> profit.
>
> The smartphone is a growing subset of the industry with only about
> 13-15% of total annual mobile device sales now. Imagine when the
> percentage is higher AND the total number of units is higher over
> time. The bottom line is that the rising tide will lift all boats,
> and the Pre is a decent enough boat to participate.
>
> My personal opinion, the Pre is neither an iPhone for that gooey
> UI and media/apps consumption, nor is it anything close to the Blackberry
> for messaging/communication (MVS?) and security. SO where does it
> leave it? Selling a few million phones each year to consumers/small
> businesses as just another option out there.

Jul 02 10:40 PM

[neutrino23:]

AT&T charges what the market will bear. It may seem high but that is what people are willing to pay.

Palm is lucky in that they can sell to Sprint without much competition, yet. They may have enough breathing room to establish a niche. Time will tell if poor handset quality and poor sales will sink them.

Jul 06 02:30 AM