Palm Pre's big day

NEW YORK--The much-anticipated Palm Pre may have gotten almost as much hype as the Apple iPhone over the past six months, but its opening day fell short of the attention iPhones grabbed on their first days.

Unlike the huge crowds of people that formed long lines and camped out in front of Apple and AT&T stores days in advance of the iPhone's launch, crowds for the Palm Pre were much smaller and tended to arrive in the morning just before stores opened.

Neither Sprint nor Palm have released official figures about how many devices they hoped to sell on the Pre's first day. But Sprint representatives had been trying to downplay expectations for iPhone-like crowds ahead of the launch. Sprint spokesman Mark Elliott told The New York Times earlier this week that the company not only didn't expect long lines for the Pre at its 1,100 stores, but that it didn't want them.

And it looks like the company got its wish. Salespeople at Sprint stores in New York City said a handful of people gathered outside their locations early Saturday morning. But most lines didn't even come close to the madness experienced on iPhone launch days.

Crowds tended to be bigger at Best Buy stores, which were offering the device for the $199 price without the $100 mail-in rebate. Customers buying a Pre from Sprint, the exclusive carrier of the device, pay $299 at the time of purchase and can get $100 back with a mail-in rebate. According to Rich Pesce, a Sprint spokesman, most new phones offered through the carrier have the mail-in rebate offer.

Many Best Buy locations sold out of the Pre almost immediately. But considering that Best Buy stores received far fewer devices for the launch than Sprint retail locations, it shouldn't come as a huge surprise that they'd run out of inventory earlier than the Sprint stores. For example, the Best Buy store on 23rd Street in New York City got somewhere between 40 and 48 phones for Saturday's launch, while the Sprint store two blocks away on Fifth Avenue in the Flatiron building received nearly 200 phones for the launch.

Even though the crowds and the hoopla may not have matched those of the iPhone, the Pre likely had a good first day. Sprint salespeople in Manhattan said they had a steady stream of customers for most of the day. And the Sprint store on Fifth Avenue only had six phones left as of 2:30 p.m. EDT Saturday.

Since the Pre's debut at the Consumer Electronics Show in Las Vegas in January, smartphone junkies have been closely tracking the device's progress as it moved toward commercial availability. Many of the people who showed up to Sprint's pre Pre-launch party in New York Friday said they had been following news and hype of the phone since it was announced.

Many of these new customers, including Mark McNulty of Westchester County, New York, are loyal Palm fans who have been long waiting for a new and better Palm smartphone.

"Palm has always had a long history as a smartphone company," he said. "And they've always been the best smartphone for calendars and handling work documents."

Pre's success is considered crucial for Palm, which was a pioneer in the smartphone market. But in the past couple of years, the company has been struggling to compete against other smartphone makers, namely Apple and Research In Motion, which makes the BlackBerry devices.

The Pre's success isn't just important to Palm. Sprint Nextel, which currently has an exclusive deal to carry the Pre, also has a lot riding on the success of the device. Sprint, the third largest wireless operator in the U.S., has been struggling to stem customer defections and repair a badly damaged reputation. At an event here Friday, Sprint CEO Dan Hesse called the Pre Sprint's coming-out party for the company's enhanced wireless network and much improved customer support.

First impressions of the phone have been very positive. Reviewers, such as CNET's Bonnie Cha, have been impressed with Palm's new webOS, which powers the Pre. A key feature highlighted in her review is the Pre's ability to allow users to have multiple applications or Web pages open on the phone at once, something the Apple's iPhone doesn't allow.

Most reviewers agree that the Pre's software makes it a much stronger competitor to the iPhone than other touch-screen devices, such as the BlackBerry Storm. But no one is expecting the Pre to rival the iPhone in terms of sales, at least not initially while it's available on only one carrier's network.

Analysts have been all over the map in terms of sales expectations for the Pre, but Macquarie Securities analyst Philip Cusick thinks Palm and Sprint will likely sell about 1 million device a quarter. And he believes the company will sell about 6 million devices in fiscal 2011.

By comparison, AT&T activated roughly 2.4 million iPhone 3Gs in the first quarter it was available. About 1 million BlackBerry Bold devices were sold through AT&T in its first full quarter. And Verizon Wireless sold roughly 2 million BlackBerry Storms in its first quarter.

Meanwhile, Apple is not sitting still. The company is expected to announce a new iPhone next week at the company's Worldwide Developers Conference in San Francisco. Most iPhone watchers don't expect any major hardware enhancements, but there has been lots of chatter that Apple may announce a 4GB entry-level iPhone, as well as a 32GB video iPhone. These new phones, along with new enhancements to the iPhone OS, will likely make it even more difficult for the new Pre to compete.