Palm Pre Sales Tapering Off; Roger McNamee Eating Crow on iPhone Prediction

“You know the beautiful thing: June 29, 2009, is the two-year anniversary of the first shipment of the iPhone. Not one of those people will still be using an iPhone a month later.”

– Palm investor Roger McNamee

Palm (PALM) seems to have satiated pent-up early demand for its new Pre smartphone, constrained supplies be damned. In a pair of investor notes issued today, analysts at Pali Research and JP Morgan say that sales of the Pre have tapered off to a point where supply and demand are roughly in parity.

“We have concluded our 3rd round of channel checks for the Pre,” writes JP Morgan analyst Paul Coster, who notes that demand for the handset is hovering at about 40,000 per week. “The gap between supply and demand has closed at Sprint and BestBuy stores, waitlists are eliminated or down, and most stores now have Pre devices in stock.”

Pali Research analyst Walter Piecyk also surveyed the Pre landscape and reached a similar conclusion, though he sees the slowing of sales as a bit more pronounced. “We believe that Palm Pre sales have slowed over the past week for Sprint to under 40,000 from 50,000-60,000 last week,” he writes. “…We suspect that if sales continue to moderate, Sprint would increase its marketing budget for the product. The marketing budget behind the product has been somewhat limited to date compared to the marketing push that Apple does.”

Indeed. And let’s not forget that Apple (AAPL) has a new handset on the market that’s been selling quite well. Makes you wonder if this ebb in demand for the Pre is somehow related.

Guess it’s looking like Palm investor Roger McNamee’s hyperbolic predictions about iPhone-to-Pre conversion aren’t going to quite pan out.

Original post

Comments

[Jon T:]

Precisely the kind of moronic predictions you NEVER hear coming out of Apple.

Jul 03 08:00 AM

[mollytjm:]

McNamee obviously is so far out of touch that it's laughable. but it's also an indication of how little most tech companies understand Apple and the need for excellent but FAST innovation. somehow they keep thinking it's about the phone...it isn't. it's about the OS and everything else that works on the device. and it's about carrying about the customer.
People stuck on Sprint don't have much choice. But i doubt you'll see people jumping from other carriers to Sprint, just to buy a Pre.

Jul 03 09:03 AM

[Frank Castle:]

Exactly - we won't know if WebOS is a contender or not until it goes to other carriers and form factors. While the Pre I have to eval is nice, I have never liked sliders due to it's cumbersome and prone to break easier.

What happens Q1 2010 with VZW and at&t will seal Palm's fate.

Jul 03 10:48 AM

[Hayweed:]

why are different form factors so important. For software developers they are a nightmare as you have to write your app numerous times or just don't support some models.

Apple - 1 form factor with 40 milliion iphones and ipod touches which means one consistent platform.

Jul 03 11:18 AM

[brewer:]

This comes as no surprise. Pre is an ugly iPhone rip off with a smaller screen, idiotic plastic buttons, battery door to fall off, no software applicatons, no media infrastructure, no tie to world class Macintosh OS X applicatons, no accessories, Sprint, and, oh yeah, it costs more.

Jul 03 11:46 AM

[Economyst:]

If Mcnamee was not as vocal would he have gained as much publicity?

Anyone who has a vested interest in Palm or Apple are not going to write a balanced articles or comments.

As neither an owner of Palm or Apple stock I would say this - Palm looks way way oversold - there is just too much success factored in. Apple makes products that tie you in and control your experience.

Jul 03 02:00 PM

[jmmx:]

Well, the Pre looks like a beautiful device. I hope they can manage to hang in there. It would be a shame for them to fall by the wayside.

As for those who hope for a bailout by Dell, I would rather see HP buy Palm. HP has a long history of quality and innovation. Dell's selling point was always based on a rush to the bottom in price. I think HP would be a much better fit.

(And you guys thought I was a total Apple wonk!)

Jul 03 06:53 PM

[jmmx:]

On Jul 03 02:00 PM Economyst wrote:

> If Mcnamee was not as vocal would he have gained as much publicity?

This is a good point!

Jul 03 06:57 PM

[huntergirl:]

sounds to me that McNamee has smoked a little too much weed in his lifetime.

Jul 03 08:10 PM

[Frank Castle:]

Actually Apple is doing just that - 3GS has a few features that the older devices do not have - even with OS 3.0 and likely next years model will introduce new functionality so Apple's market will be just as fragmented as it matures.


On Jul 03 11:18 AM Hayweed wrote:

> why are different form factors so important. For software developers
> they are a nightmare as you have to write your app numerous times
> or just don't support some models.
>
> Apple - 1 form factor with 40 milliion iphones and ipod touches which
> means one consistent platform.

Jul 03 11:00 PM

[realitybiter:]

Mcnamee is still drunk on his lucky dotcom winnings. Apple's iphone is to mobile devices now, what microsoft was to PC OS in the 80's. They own it.
Mcnamee should spark another bowl, jam with his band (hopefully alone), and thank God for his coincidental collision with fortune.

Jul 04 01:36 AM

[Warnin4U:]

Anyone with Palm stock should look at any spike as a sell opportunity. "Too little too late" comes to mind. If there is a battle it is between Apple and RIM. Palm hasn't been a factor in years, has no cache, little brand recognition with the younger set and I haven't seen one advertisement. What does it do, why should I buy? Mcnamee can't be faulted for pushing the stock, but we can look at him and surmise his opinions are of little value. I bet he's selling!

Jul 05 08:23 AM

[Gerard Hall...:]

Tomorrow Palm and O2 are likely to announce O2's UK exclusive for the Pre. O2 currently has 8.7 post paid subscribers of those, a little more than 1.0 million use the iPhone. More than 1.0 million are on Nokia's aged N95. To me that brings the market to about 6.5 million or 270K units per month the same as Bell Mobility. Not likely to bring millions of units to Palm anytime soon.

I've been wrong on this stock since shortly after the February Quarter EPS report. The Pre is a decent phone, good, not great as a former Treo and current Window's phone user it seemed a little quirky and missing some key features. BTW it is noticeably slower then my year old HTC Touch Diamond.

There is enough to the Pre that the company should be able to obtain equity financing. But at what price? Assume it was profitable then it would have 216MM total potential shares issued. $3.5Bn market cap is a lot for a singe product company in a very competitive market.

Jul 05 12:44 PM

[EJL:]

JamesApple must be on vacation - usually he's all over these posts spewing.

Does this surprise anyone? The Pre will sell fine, but it will taper off and settle into a "normal" sales pattern (at whatever pace normal is) and then it will spike again when Pre becomes available on GSM networks in Europe. The success or failure shouldn't be judged just yet for WebOS.

Jul 06 01:04 PM

[Emankarra:]

The return rate of Palm Pre is very high. One guy made a mathematical proof at
finance.google.com/gro...
The result: return rate 38% (yes, thirty-eight). I'm not sure if this is correct, but if you go to the store and ask people, there are many who say this was second or third time.

Jul 07 07:23 AM

[Sliver:]

If you think that is mathematical proof, you need to go back to school. That is a kid with a laptop copying formulas from his highschool statistics book.


On Jul 07 07:23 AM Emankarra wrote:

> The return rate of Palm Pre is very high. One guy made a mathematical
> proof at
> finance.google.com/gro...
>
> The result: return rate 38% (yes, thirty-eight). I'm not sure if
> this is correct, but if you go to the store and ask people, there
> are many who say this was second or third time.

Jul 09 05:15 PM