The handheld devices were a popular holiday gift choice this year, especially as prices dipped below $300 for the Palm III, the high-end version of the PDA from Palm Computing. The estimated retail price for the Palm III is $369.
But retailers, especially online stores looking to drive holiday e-commerce traffic, engaged in a full-scale price war last month. Many stores offered Palm III's for under $300, and several priced the device under $250. Vendors treated the device as a loss leader, sources say.
Now that the holidays are over, prices are creeping back up. For example, Buy.com, an online vendor who sparked the pricing battle with its holiday price of $248.95, is today offering the Palm III for $276. NECX, another online store which offered the Palm III for $269 during the holiday shopping rush, has adjusted the price to $299.
By comparison, Onsale, which recently announced it would begin selling computer systems at wholesale cost, offers the Palm III for $269.
Buy.com aims to beat all prices on the Internet, which can result in pricing fluctuations, according to Brent Rusick, vice president of sales and operations for the company. Buy.com, which offered the Palm III for as low as $209 late last fall, merely reacts to the market, he said.
"We search the Internet on a daily basis for the lowest price on a product, and then match or beat those prices," he said. "What was happening was we were responding to the market, which was offering very low prices." Buy.com and other online stores can adjust their prices much more quickly than real-world retailers, who are delayed by fixed advertising and merchandising.
Palm Computing, a division of 3Com, has not adjusted the prices in several months, according to a company spokesman. Additionally, there have been no inventory issues in the retail channel that would affect pricing, she said.
"There's plenty of product out there," Rusick confirmed.
Even at the relatively higher price of $299, consumers are still getting a bargain, according to Ron Hauwert, product manager at Insight, which currently lists the Palm III at $332.
"The prices did get down to between $249 to $299, depending on how much the reseller wanted to take it in the shorts," Hauwert said. "They were using it as a loss leader to drive Christmas traffic, and that's not needed now."
Insight's price of $332 is indeed a bargain, compared to the prices at some brick-and-mortar stores. Over the weekend, CompUSA advertised the Palm III for the estimated retail price of $369.