Headline Feeds
Palm (Nasdaq: PALM) and Verizon Wireless announced a deal 
Thursday that brings the device maker's popular Centro smartphone to Verizon subscribers.
The Centro's debut on Verizon comes some nine months after Palm launched the device on Sprint's (NYSE: S) wireless network and about five months after it became available to AT&T (NYSE: T) customers. The handset, which is available to Verizon customers on Friday, June 13, costs US$99 after a rebate and with a two-year contract. Without those subsidies, the phone is priced at $389.99. Adding an unlimited data plan to the phone costs $30 per month in addition to the voice plan the customer opts for.
"This is a great move on the part of Palm and Verizon Wireless," said Ramon Llamas, an analyst at IDC.
Entry-Level Smarts
Verizon's Centro, available in cobalt blue only, will run on the carrier's EV-DO high-speed data network, allowing users to quickly send and receive e-mail messages and attachments or surf the Web using the Blazer browser. It runs the Palm OS and includes one-touch access to applications.
The handset features a 320 by 320 touchscreen display, a full QWERTY keyboard, a 1.3 megapixel 2x digital zoom camera with video capture, as well as a digital media player and 64 MB of storage. Users can boost the handset's memory up to 4 GB with a microSD memory card.
The smartphone also doubles as a modem for notebook computers. That functionality will add $30 to the user's monthly bill.
"The Centro [is] a smartphone for people that are a little nervous about getting a regular smartphone. While most phones sold in the U.S. are feature phones, I believe that the trend is that someday the majority of phones will be what we all [call] 'smartphones.' The Centro, and the Blackberry Pearl for that matter, help move the process along for those who see the traditional smartphones as being too much," Bill Hughes, an In-Stat analyst, told TechNewsWorld.
Although users will probably want a data plan with the Centro, he added, anecdotal evidence indicates that a surprising number of Blackberry Pearl users just like the way the handset looks and do not bother with the data plan.
"It could be that the functionality of the Centro allows them to stay with voice-only plans until they are ready to add a data plan," Hughes said.
iPhone 2.0 a Spoiler?
The latest version of the iPhone, priced at $199, could "cause some users to hesitate when considering the Centro," according to Hughes, but opting for the Apple (Nasdaq: AAPL) handset comes with a price.
"The complication with the iPhone 2.0 is that a data plan is $10 more per month than it was with the iPhone (based upon our interpretation of the announcement). Over a two-year contract, that would be $240 more than for the iPhone 1.0, making the total cost of ownership for the iPhone 2.0 somewhat more expensive than the original iPhone," he noted.
Other costs associated with the iPhone include the $150 to $200 termination charge some customers of other carriers would have to pay to switch their subscriptions to the AT&T-exclusive handset, said Llamas.
"Every day, there are [a] certain number of millions of people whose contracts end and will switch, but will they buy an iPhone? There may be people who will make the switch and pay to get out of their contract."
However, neither Llamas or David Chamberlain, another In-Stat analyst, expect the iPhone 2.0 to seriously hurt sales of the Centro.
"The Centro user and the iPhone user are two different people with two different needs," Llamas noted. Those who choose the iPhone get a touchscreen device that surfs the Web, downloads multimedia content and also plays music and videos. The handset "does that really, really well," he said.
"The point behind the Centro is connectivity. You're going to be connected with the people most important to you very easily. It pushes that personal information management so you can send the message quickly, call them quickly, view your schedule quickly and see how it all coordinates to get your tasks done quicker. The point is that somebody staying connected, able to do things from the palm of their hand, without having to sit down at the PC," he explained.
Rather than Palm, the makers iPhone wannabes and so-called iPhone killers are the companies that have more to fear from the Apple handset, Chamberlain told TechNewsWorld.
"The biggest threat from the lower-price iPhone will be to the iPhone clones that are more expensive and less capable. Devices such as Sprint's Samsung Instinct and Verizon Wireless' Voyager -- I think the keyboard keeps it out of the iPhone's realm," he said.
"And face it, for a lot of buyers, there is a big gap between a $100 phone and a $200 phone -- along with the difference in pricing for the monthly service plans," Chamberlain added.
Rough Palm
"Palm's been having its troubles, that's for sure. However, there are several things in the market that are pointing to smartphones being the next important step for mobile operators. People who use smartphones use much more data than those with feature phones, and the operators know that; they're going to be trying to put as many smartphones in people's hands as they can. Look for that trend to accelerate in the near future," Chamberlain explained.
"That definitely puts Palm in a more favorable position," he concluded.
Palm is the No. 3 smartphone vendor in the U.S. behind Research In Motion (Nasdaq: RIMM) and Apple. While Palm's share of the smartphone market dropped in the fourth quarter of 2007 to 7.9 percent from 23 percent in the first quarter, according to IDC figures, that was largely due to the introduction of the iPhone. The handset maker's fortunes have risen since then, and the company nearly doubled its market share in the first quarter of 2008 to 13.4 percent.
"The iPhone helped grow the market, but it also took away market share. It's not just Palm they took it away from. They took it from a lot of the other dominant players as well," said Llamas.
"Centro has been tremendously successful for Palm. They hit the sweet spot with first-time smartphone users. I think in March, the Centro passed the 1 million mark in global sales, which is pretty significant. Verizon has a great footprint nationwide, and they have a lot of traction and satisfied customers. It's deal to buy Alltel will make it the largest carrier in the U.S. So both companies are bringing something to the table," he concluded.
Talkback: 
