Why Pre is the right move for Palm

Before I gave in and started using an iPhone, I was a stalwart Palm supporter. In the late '90s, I was actually a beta tester for the very first Pilot 1000 device. It was light years ahead of what anyone else was doing at the time, and it "just worked."

Palm led the handheld industry through most of the 2000s, but due to a lack of innovation after the introduction of the Treo 600 series of smartphones, Microsoft's Windows Mobile slowly ate away its market share. But Redmond's offerings didn't catch on with consumers, and that gave a second lease to the Palm OS and its family of products.

Then there was the Foleo, a Linux-based Netbook that perhaps arrived ahead of its time. When it was introduced in mid-2007, reactions were mixed. It was one of the first devices from a reputable and established company to fill the gap between smartphones and laptops, but critics weren't receptive to its $500 price tag and lack of compatibility with third-party software.

But Palm was also quietly tuning a version of Linux for its next-gen handsets. Last week at CES, Palm announced a new operating system, called Web OS, and the first device to run it, the Pre. It also announced an application store, called Pre Catalog. And that's when things got very interesting: the Pre blew everyone away.

Critics, pundits, and all kinds of bloggers (including myself) knew Palm had something to show. We also knew that if Palm didn't hit a home run, it would be game over, if you'll forgive the mixed metaphors.

As it turned out, Palm hit what appears to be a grand slam. Palm has a competitor to the iPhone and the G1. For the first time in years, gadget fans were drooling over a Palm device.

In short, Palm went from a company that nobody cared about to a leader in the smartphone field overnight. No small accomplishment, considering that no real demo units have been sent out, and a mass launch is still months away. This much excitement over a phone hasn't been seen since Steve Jobs introduced the first iPhone two years ago.

So far, Sprint has an exclusive lock on the Pre at launch, though it's been confirmed that a GSM model is also in the works. There is no word on whether any American GSM carriers plan to offer it. Another rumor has Sprint charging $399 for the 8GB Pre at launch, $200 more than Apple and AT&T charge for the 8GB iPhone.

That will make those locked into Sprint contracts happy, but it might not bode well for new customers. Palm's Web site also notes that the Pre will support Bluetooth tethering, something Sprint has disabled in other Palm products.

Palm has a chance here to turn its fortunes around, as it has its stock, which rocketed 80 percent on the CES announcement to $6.46 a share, up from a low of $3.40 the morning of the announcement, and as of closing Monday stood at $5.91. This gives Palm a mandate, and with luck, it can make a three-horse race out of the the fourth-gen phone market.

Even if it's not the proverbial iPhone killer, it's an impressive device that has made Palm a player again in the industry it created.