Thursday, June 11, 2009

Palm To Unveil New Smartphone Pixie To Challenge iPhone's Dominance

. Thursday, June 11, 2009

By stockOzone team

Palm Inc. (NASDAQ: PALM),the pioneer of handheld devices, is readying Pixie, a cheaper follow-up to its popular Pre phone in order to challenge the dominance of Apple's wildly popular iPhone.The new phone is expected to be a candybar-shaped touchscreen device that would sell for $99, and it's aimed directly at the cheaper Apple (NASDAQ: AAPL) iPhone.

Palm is working with its contract manufacturing partner Compal to have the phone available for sale in the U.S. before the end of the year to take advantage of the holiday buying season, says Collins Stewart analyst Ashok Kumar.Palm (PALM Quote) is apparently preparing Pixie, a lower-priced follow-up to its popular Pre phone.Pixie is expected to have around 4GB of storage, compared to the 8GB capacity of the Pre, and a two-megapixel camera, compared to the Pre’s three-megapixel snapper.

The Pixie would give Palm a second key product and add momentum to the fallen smartphone pioneer's remarkable rebirth.

According to reports, Pal is also readying another smartphone named Castle, also known as the Palm Eos and is expected to be shaped like a BlackBerry, and have a 2.6in touch-screen, 4GB of storage, integrated GPS and a two-megapixel camera.

Early this month Palm Inc. released its much anticipated handset Pre which features an operating system that combines calendars, contacts and messages from different accounts. It synchronizes with Apple’s (NASDAQ: AAPL) iTunes music store and has a screen that lets users zoom in and flip through applications without closing them. Though both Sprint and Palm have refused to disclose Palm's weekend sale figures, according to analysts’ estimates, Sprint sold 50,000 to 100,000 Palm Pre smartphones Saturday and Sunday. Sprint admitted that the launch exceeded the company's expectations.

Apple stole much of Pre's thunder by introducing the next-generation iPhone, which will be outfitted with new processing guts to give it more power and speed. The iPhone 3G will come with 16GB of storage for $199 with a two-year contract and a 32GB version that will sell for $299 with a two-year contract. Apple is also releasing a big software upgrade. The 3.0 OS is loaded with new features for old and new iPhone users.

In addition to the new phones and new software, Apple also trimmed the price of its 8GB iPhone 3G to $99, which could put pressure on the Pre. Piper Jaffray (PJC) analyst Gene Munster speculates this cut will double demand for the iPhone—as happened after Apple reduced the price on the original device to $199 from $399 last year.

Disclosure: Author does not own any of the stocks discussed here.

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