Palm Pre: Fans Gather for Launch of ‘iPhone killer’

NEW YORK/CHICAGO (Reuters) – Small crowds gathered at Sprint stores on Saturday for the official launch of Palm Inc’s Pre, the much-hyped smartphone seen as Palm’s best chance to claw back market share lost to rivals such as Apples iPhone and Research In Motion Ltd’s Blackberry.

The new high-end phone, considered a pivotal product for both Palm and Sprint Nextel, has been greeted by rave reviews.

Lines were far shorter than those that snaked around Apple stores for its first hugely popular iPhone two years ago, but many said they were eager for the new product.

“I wanted their iPhone killer. I’ve been anticipating this for a while,” said Peter Lewis, who bought phones for himself and his wife at a Sprint store on Chicago’s north side, where some 45 people were in line when the doors opened at 8 a.m.

“This is my birthday present to myself,” said Wilma Rivera, 36, a heating technician who brought her 17-month-old daughter to Sprint’s flagship store in Manhattan.

Rivera, a long-time Palm user, said, while she had been tempted by iPhone, sold only by AT&T Inc in the United States, she “never wanted to leave Sprint.”

Sprint, the No. 3 U.S. mobile telephone service, is depending on Pre to help stem customer defections and win back subscribers from rivals such as AT&T and Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc.

Pre is hitting the shelves just before Apple is widely expected to announce a new iPhone on June 8.

Do Price and Keyboard Give Pre an Edge?

The Pre costs $199.99, after a $100 rebate, for customers who sign a two-year service contract. It is priced in line with the $199 smaller-capacity iPhone. Pre’s monthly service fees start at $69.99, including unlimited text messaging, lower than the cost of iPhone service plans with similar features.

The Pre’s tiny keyboard is expected to attract some consumers who find it difficult to type on iPhone’s virtual touchscreen, such as Lynne Margolin, a Chicago grandmother who traded up from a Palm 650 Treo to the Pre on Saturday.

Margolin said one concern is that the number of applications may be limited early on compared to the vast number of “apps” her friends can get on their iPhones.

Pre was the most talked about device at the Consumer Electronics Show in Las Vegas in January. It is the first Palm phone to use the company’s new webOS operating system.

Palm investors have been waiting for Palm’s new mobile platform since June 2007, when Elevation Partners took a $325 million, 25 percent stake in Palm and brought in former Apple executive Jon Rubenstein, who helped create the iPod.

Sprint hopes to attract corporate clients, but the Pre could have a difficult time making inroads with often conservative corporate technology departments.

Dan Corletto, a Palm user who manages cellphones for about 600 people at a New York law firm, said he was buying a Pre for himself, but did not expect it to be a hit at his company.

“They’re a BlackBerry shop,” he said. “(Pre’s) all too new to adopt within a corporate environment.”

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