Palm has started laying off employees as a cost saving measure in the face of lower then expected Palm Pre sales, according to a recent blurb on CoolSmartphone.
Since Palm first introduced the Pre to the public at CES 2009, the Pre, rightly or wrongly, has been typecast as a true competitor to the iPhone. The Pre’s UI is undoubtedly slick, but a number of issues – such as poor battery life, a lack of applications, and a high pricetag – haven’t done much to help the Pre give the iPhone a run for its money. Being relegated solely to Sprint surely doesn’t help either.
Also problematic are reports which call into question Palm’s hard sales data. Specifically, Palm’s 10k filing with the SEC counts all shipments of Pre units to stores like Best Buy as actual sales. There’s not a legal issue in doing that, but if Palm Pre’s aren’t moving out the door, doing so greatly inflates the perceived number of Pre’s actually in the hands of customers.
Moreover, analyst David Ellers estimatesthat there’s enough Palm Pre’s back logged in retail inventory to last for an astounding 11 weeks. By way of comparison, Apple’s stock of iPhones are typically set up to last for 4 weeks before new shipments come in. While Palm is still getting paid for the phones languishing in retail inventory, this inventory delay doesn’t bode well for the Pre going forward.
And that might help explain the unusual number of price cuts surrounding the Pre since it was first released early last Summer.
Palm and its partners have aggressively been lowering the price of the Pre in recent weeks in an apparent attempt to boost up sales. Just 3 months after its initial release, Sprint lowered the price of the Pre to $149, down from a previous asking price of $199. Meanwhile, Amazon is already selling the Pre for $99 while Walmart recently introduced a special offer that priced the Pre at paltry $79. This stream of price cutting is great for consumers, but clearly isn’t a good sign for Palm who is counting on strong Pre sales to help restore the company back to relevancy.
Incidentally, the Pre’s latest WebOS update doesn’t restore iTunes syncing functionality. Point: Apple.