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Moto, Palm take hits from iPhone price slash

updated 11:10 am EDT, Fri September 7, 2007

iPhone Price and Moto/Palm

The unexpected iPhone price cut is likely to pose a major challenge for its immediate rivals in the smartphone business, according to new financial analyst reports. While the Apple phone is still expected to sell at a premium relative to most competitors, the reduction will narrow the gap between the handset and other high-profile competitive models, many of which were expected to thrive in part due to an assumed larger gap. Palm in particular may take one of the largest hits, according to Oppenheimer researcher Lawrence Harris, as some of the company's phones are priced the closest to the Apple device and share a similar mixed-media focus.

"It has the potential to take away from Treo sales," Harris said. "I think that's why you're going to see additional emphasis on cheaper models like the Centro."

The new Palm phone is rumored to release through Sprint in early October for $99 with a contract and would be intended to invert the traditional smartphone market, appealing to younger or first-time buyers without the income or desire to buy a more expensive model.

Motorola is also expected to suffer from the iPhone's $399 price. The RAZR2 was launched this summer in an attempt to recapture the success of the original RAZR and includes faster Internet access than the Apple device, but is now priced relatively close at between $250 and $300 after factoring in a service agreement. The smaller gap may discourage buyers from considering the RAZR2 now that cost is less of an issue and could make attendees of today's Motorola analyst meeting anxious for news of a more direct response. "It does put pressure on Motorola to show some new products or discuss their product strategy on Friday," Harris noted.

On Wednesday, Motorola admitted that needed to diversify its phone lineup rather than rely on a single popular phone to carry its sales, which have slumped in recent years. But the company should still be thankful that Apple has entered the market at all, said chief finance officer Tom Meredith. The insistence on including Wi-Fi with the iPhone has broken a traditional resistance by carriers to the technology, which could theoretically siphon money away from lucrative data plans.

"I think Steve [Jobs] and Apple did companies like Motorola a favor in that regard," Meredith said.

By Electronista Staff
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  1. cblackmo

    Fresh-Faced Recruit

    Joined: Nov 2006


    bitter-sweet Favor

    I doubt the Centro will find enough of a following to help Palm. It's too ugly and old-fashioned looking for younger buyers to enjoy. And it's two years too-late to win over older Blackberry-addicted professionals.

    And Apple may do the mobile industry a favor by popularizing WiFi; but can Moto/Palm/LG/Samsung take advantage of the favor? Or will Apple beat them at that as well?

    If the industry continues their past behavior of letting the broadband providers call the shots, then my bet would be on Apple - which is currently the only company providing a product/brand with enough market appeal to leverage against the service providers.

  1. tindrum

    Fresh-Faced Recruit

    Joined: Apr 2004


    RAZR V2 crippled

    Verizon did stuff to my friend's RAZR V2, like put different buttons on the front touch-screen than the ones documented by Motorola. He hasn't yet found a way to configure those buttons the way he wants yet. If carriers would get their grubby fingers out of the decisions phone manufacturers make, and allow more freedom, they'll get customers. If not, it's an even, lousy playing field.

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