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Palm Pixi: Big Bet on a Small Smartphone

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Palm Pixi. Click to enlarge.
Source: Palm

Palm today introduced the Pixi, the second handset powered by the company's webOS mobile software, as an entry-level QWERTY smartphone that will run on Sprint's network.

While the Pixi is slated to go on sale in the fourth quarter, Palm (NASDAQ: PALM) did not disclose further details of when the unit will ship, nor its price.

The launch of the Pixi follows Palm's efforts at a comeback that began with the June 6 launch of the company's flagship Pre smartphone. The webOS-based Pre received generally positive reviews but has failed to meet some analysts' sales expectations.

That may change, as Sprint (NYSE: S), the exclusive carrier for Palm's new family of webOS handsets, will today begin selling the Pre for $149 -- a $50 price cut.

Along with launch of the Pixi, the moves aim to help struggling Palm -- once a pioneer in the mobile device space -- reinvent itself as a contender in the lucrative smartphone market under the new leadership of Apple veteran Jon Rubinstein.

Few see it as an easy task: Palm also has to keep pace with rivals like BlackBerry maker Research In Motion (NASDAQ: RIMM), which has been busily releasing new models, and Apple (NASDAQ: AAPL), which earlier this year began selling a speedier, more powerful version of the blockbuster iPhone.

One way Palm is aiming for a resurrection is through ecosystem being built around webOS, as the company begins to ramp up its Palm Catalog mobile applications store.

Right now, Palm is accepting applications into its app store on a limited basis, though Rubinstein has said tens of thousands of developers have downloaded the webOS SDK since it was released in July. By fall, Palm will begin reviewing apps submitted by developers for sale in the Palm Catalog.

In the meantime, the debut of the Pixi will help grow the platform's reach.

"With Palm webOS, we're creating a new, more intuitive smartphone experience defined by unmatched simplicity and usefulness," Rubinstein said in a statement. "Palm Pixi brings this unique experience to a broader range of people who want enhanced messaging and social networking in a design that lets them express their personal style."

Palm's tiny Pixi

The diminutive follow-up to the Pre measures a bit more than two inches wide and four inches long, and is less than a half-inch thick. The 3.5-ounce Pixi boasts a full keyboard, 8GB of internal storage, a 2-megapixel camera, 2.63-inch multitouch screen with 320x400 resolution, GPS, Bluetooth and accelerometer.

The model runs on Qualcomm's MSM7627 chipset, and while it lacks Wi-Fi -- a feature in more expensive devices like the Pre, the iPhone and several BlackBerry models -- the Pixi includes 3G courtesy of EVDO Rev. A.

The Pixi also supports video and music, including Palm's media sync feature that enables webOS devices to add music from Apple's iTunes software. That feature has irked Apple, which blocked the function on the Pre with software updates. For now, however, the feature works with some versions of iTunes.

[cob:Special_Report]"You can use Palm media sync to customize your phone with music, photos and videos from iTunes (Versions 8.1.1-8.2.1), or use the on-device Amazon MP3 store to purchase individual songs or full albums over-the-air," Palm said in a statement.

On the e-mail front, Pixi has Exchange ActiveSync for access to corporate Microsoft Exchange servers, as well as support for Google and Yahoo push, POP3 and IMAP.

The Pixi's webOS offers a centralized view of contacts and messaging. In addition to linking information from Google, Facebook and Exchange ActiveSync, Palm Pixi adds Yahoo and LinkedIn integration to Palm Synergy -- the built-in webOS feature for aggregating social networking and IM into a single view.

Synergy on Palm Pixi also shows all conversations with the same person in one chat-style thread, so for instance, a conversation started with AIM can be continued by text message later. A new Facebook app will also be available when the Pixi ships.

Mirroring other handset makers who are highlighting personalization as a defining characteristic, Palm is introducing the Palm Pixi Artist Series -- numbered, limited-edition back covers to be sold separately.

Weighing the Pixi

At least one analyst is giving Palm's Pixi strategy a passing grade.

"Palm has tried this form factor -- with a lower feature content combination -- before with great success, it was called the Centro, and Palm sold millions of them. The Pixi is clearly aiming to recreate that entry-level QWERTY smartphone experience with webOS. I expect it will sell reasonably well at Sprint, but I do not expect it to pull subscribers from other carriers," Avi Greengart, analyst at Current Analysis, told InternetNews.com.

Still, Greengart said the Pixi debut is an important step for Palm -- and Sprint.

"This move shows they're expanding beyond a single webOS product to start building out a product line with multiple devices in different form factors and at different price points. It also gives Sprint a rich lineup of touchscreen smartphones with integrated social networking features: the Palm Pixi, Palm Pre now $149, and HTC Hero ($179)."

The lack of Wi-Fi, as well as some design issues, however, may deter some buyers, Ken Dulaney, analyst at Gartner, told InternetNews.com.

"I don't like the fact that Sprint has the product built with no Wi-Fi," Dulaney said. "That is such backward thinking. AT&T had that approach in previous years but gave that up when it realized it was just making life difficult for its users."

Palm and Sprint could learn from rivals in other areas as well, he added.

"The webOS devices are heavily gesture-centric. Some users may find issues with having to use the screen for all navigation, especially when the menus are on the top left and right. An optical mouse like RIM's would have been attractive," he said. "In fact, Palm really should start thinking about high-use control buttons on the device like you find with Android. I think it would serve them well."

Despite the shortcomings, Dulaney said the Pixi should be successful in the marketplace.

"It's a reasonable offering from Palm and an obvious evolutionary product from the Pre," he said. "I find the open face design smaller and probably easier to use than the Pre because you don't have to open the keyboard. Most likely it will appeal to former Centro users due to its smaller screen."

"They keyboard is a bit tight but acceptable. I would say this is a small market expander but given its overlap with the Pre, not as much as would have been if they had done a full touchscreen interface. But overall, a nice product that should do well at Sprint especially since Sprint is somewhat starved for good smartphones."