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Palm's New Smartphones Discounted To Oblivion?

The Palm Pre has been on sale at Sprint for about six months now. Its little brother, the Pixi, just hit store shelves this past weekend. Both can (already) be had for a song and a dance.

Right now, Sprint.com is selling the Palm Pre for $150. That's $50 less than when it originally went on sale back in June. The Pixi is being sold on Sprint.com for $100. That's the brand new price. Problem is, you're over-paying if you buy directly from Sprint.

The Pre is available on Wal-mart.com for $99 and the Pixi is discounted to a mere $25 by Walmart.

Amazon has cut prices even deeper. There, the Pre will run you $80 and the Pixi $25.

All of these prices require service contracts with Sprint.

With the holiday shopping season knocking on the door, it makes sense that some items are discounted from their regular price, but in Palm's case, I think it is setting a bad precedent.

Granted, discount retailers have existed on the Web for some time. Sites such as Wirefly.com and LetsTalk.com offer low-cost or free handsets from nearly all the carriers in the U.S. The problem is that it is creating a false sense of what things cost. The list price of the Palm Pre is $550 and the list price of the Pixi is $400. This is what you would pay if you bought one off the shelf with no contract with Sprint.

I think it's unfair to manufacturers to create the notion that smartphones should cost less than $100. These devices cost money to design, engineer, manufacture and ship to the U.S. There's no way that Palm has even come close to recouping the development costs of the Pre and, more importantly, its new webOS smartphone platform.

I recently argued that the $99 is too cheap, and I'd apply the same arguments on Palm's behalf. A $25 price point for the Pixi certainly is attractive, but it also cheapens the idea of what that device is and what it does. People think the $25 phones are low-end, incapable handsets. That's not true in the Pixi's case. It's sending the wrong message.

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