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AT&T To Sell Palm Smartphones

Palm's stock rose on news that AT&T is taking preorders for the Pre Plus and Pixi Plus.




Palm Pre
(click for image gallery)
Palm on Monday said AT&T would soon sell the Pre Plus and Pixi Plus, giving the struggling smartphone maker a boost.

Palm did not give an exact date for when the devices would be available, but said the phones would be available in AT&T stores and online in the "coming weeks." The Pre Plus would sell for $149.99 and the Pixi Plus for $49.99, with a two-year service contract and after a $100 mail-in rebate. AT&T is taking preorders online.

AT&T was first reported last month to be preparing to carry the Pre and Pixi. The official announcement on Monday lifted Palm's stock. In afternoon trading, shares were up about 3% to $4.13.

Palm, a smartphone pioneer, has seen its market share fall as competition intensifies from larger players, such as Apple, Research in Motion, and makers of smartphones based on Google's Android operating system.

Palm had hoped to gain market share following the release a year ago of a new operating system, called webOS, that was the foundation of a new line of smartphones, led by the Pre. Instead, Palm has lost share to smartphones built on Google's Android operating system, a relative newcomer in the market.

Some analysts have said the window of opportunity for Palm may be closing, as Android phones continue to gain ground, RIM's BlackBerry retains its hold on the corporate market, and Apple's iPhone grows stronger in the consumer market.

Last week, the company reported that the number of smartphones actually sold to people during the fiscal quarter ended Feb. 26 plummeted 29% to 408,000 units. By comparison Apple sold 8.7 million iPhones in its most recent quarter.

The sales drop has led to excess inventory that could become a serious problem. American Banking News reported that Palm plans to halt production of the Pre and Pixi in an attempt to lower inventory levels. Palm denies the report.