Will The Palm (PALM) Pre Challenge RIM's (RIMM) Blackberry?
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Palm's (Nasdaq: PALM) stock price has shot up, while Research In Motion's (Nasdaq: RIMM) stock has stagnated in recent months. Palm's valuation has actually risen from a low of $160 million to over a billion on investor excitement for Palm's soon-to-launch Palm Pre.
Americans always want the next latest, greatest gadget and Palm is hoping its Pre will be that 'IT' product. However, Palm will definitely encounter obstacles. First, the Palm Pre will be exclusively distributed in the U.S. by Sprint Nextel Corp. (NYSE: S), a weak carrier. Second, kinks could emerge in its brand new operating system once the phone hits the market.
The Wall Street Journal today cautioned investors that if the Pre does not become that 'IT' product, Palm has little to fall back on. For example, demand for Palm's older phones, has fallen so much that the company has said revenue in the quarter ended in February is expected to drop by more than 66%.
However, although Palm's future is not known yet, the Journal said there is still reason to be bearish on RIM. It truly had a terrible debut with its touch-screen, the Storm. The phone has had many problems and because of this Research In Motion has surely loss some customer goodwill and loyalty.
Additionally, with the new supply of smart-phone providers, wireless carriers may use their clout to squeeze prices from the manufacturers.
The Journal did note even with RIM's recent problems, it's way too early to give up on the Blackberry maker. The Journal said, "It is easy to be seduced by the promise of the hot new device. In this case, however, sticking with RIM looks a better bet then grabbing hold of Palm."
Americans always want the next latest, greatest gadget and Palm is hoping its Pre will be that 'IT' product. However, Palm will definitely encounter obstacles. First, the Palm Pre will be exclusively distributed in the U.S. by Sprint Nextel Corp. (NYSE: S), a weak carrier. Second, kinks could emerge in its brand new operating system once the phone hits the market.
The Wall Street Journal today cautioned investors that if the Pre does not become that 'IT' product, Palm has little to fall back on. For example, demand for Palm's older phones, has fallen so much that the company has said revenue in the quarter ended in February is expected to drop by more than 66%.
However, although Palm's future is not known yet, the Journal said there is still reason to be bearish on RIM. It truly had a terrible debut with its touch-screen, the Storm. The phone has had many problems and because of this Research In Motion has surely loss some customer goodwill and loyalty.
Additionally, with the new supply of smart-phone providers, wireless carriers may use their clout to squeeze prices from the manufacturers.
The Journal did note even with RIM's recent problems, it's way too early to give up on the Blackberry maker. The Journal said, "It is easy to be seduced by the promise of the hot new device. In this case, however, sticking with RIM looks a better bet then grabbing hold of Palm."
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