Palm Analysts, Best Buy Suffering from Premature Elaboration

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Includes: BBY, PALM, S
by: John Paczkowski

99-pre-bby-mobileAdd another voice to the chorus of analysts claiming sales of the Palm Pre have been on the decline these past few weeks. In a research note published this morning, CL King analyst Lawrence Harris, speaking to the controversy over sell-though sales of the Pre, cast his lot with those who feel sales are slowing.

“Our channel checks suggest sales of the Pre have indeed slowed. Store traffic at Sprint stores has declined since mid-June,” Harris wrote;

The Pre, which initially was not available for online purchase from Sprint’s website, became available last week. We believe a majority of the Pre sales have been made either to existing Palm users or Sprint subscribers. It also appears not to have been as successful as the iPhone in terms of winning subscribers from other carriers.

Harris notes that even Sprint (NYSE:S) CEO Dan Hesse seems uncertain of the device’s true impact in the market. Speaking at Fortune’s Brainstorm: Tech conference in Pasadena, Calif., last week, Hesse said of the Pre,

You won’t know if we have a real hit on our hands until its been out three months, four months, five months…It’s too early to tell…We’re just getting it rolled out in decent quantities for direct distribution.

An interesting admission. That said, the Pre did set record first-day and weekend sales for Sprint, And according to the channel checks of some other analysts sales are not slowing. Fact is, we won’t know for sure Palm (PALM) and Sprint go on record with real sales metrics. Hopefully Sprint will do that later this week when it reports earnings.

One last point worth noting here: CL King’s note arrives amid widespread reports this morning of a Best Buy promotion that cut the Pre’s price to $99 with two-year contract. Though the retailer dismissed the cut as an “unintentional pricing error” and promptly withdrew it, a number of Pres appear to have been sold at that price across the country.

Odd that such an accident would occur nationwide complete with in-store pricing sheets, isn’t it. Makes you wonder if someone jumped the gun on a forthcoming promotion and perhaps if we’ll see the Pre at $99 before the end of the summer. And if we do, what at what price will the Eos/Pixie–the Pre’s rumored little brother–be sold? $49.99?

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