Lines Form To Be The First To Own A Palm Pre; Retailers Report Shortages

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Lines Form To Be The First To Own A Palm Pre; Retailers Report Shortages

Hours after the Palm (NSDQ: PALM) Pre went on sale this morning, retailers started reporting shortages of the devices and were adding customers to a waiting list.

Bloomberg reports that Sprint’s store on Mission Street in San Francisco sold 60 Pre phones within two hours and then started a waiting list. The store’s manager Daniel Chan told Bloomberg that the new phones will come in a few days, and that interestingly, “about half the people who bought the Pre already owned an iPhone.” Sprint (NYSE: S) declined to say how many stores sold out of the phones. Bloomberg said analysts are expecting this weekend’s sale to range anywhere from 50,000 on the low-end to up to 200,000.

The race is on. Palm elected to take the risky bet of releasing the phone two days before Apple’s Worldwide Developer Conference, where the company is rumored to unveil a new iPhone of some sort. However, many wonder if that was a bad decision. If Apple’s announcements trump the Pre it will kill Palm’s and Sprint’s momentum. But, there’s also a chance that Apple’s performance will be a disappointment, and Pre will takeover as the must-have device.

Sprint held exclusive sales events around the country on Friday night, where invitees were allowed to buy the Pre early. In Seattle, the atmosphere was like a party. Sprint served drinks and appetizers, hired a DJ and provided valet parking for the cramped lot. Two guest appearances were made by Seattle Seahawks, including Offensive Tackle Walter Jones and just-signed T.J. Houshmandzadeh, a wide receiver. Customers started trickling in at 6 p.m. and kept a steady pace for at least an hour.

Among the customers in line, was a family of four, who was making the big decision to upgrade from pre-paid phones to the Palm Pre. The youngest in the family will remain on the pre-paid plan, while the other three, including a daughter in high school, bought Pres. In an email to mocoNews, the father wrote: “We are going from only using our phones for emergencies to totally being connected. I will be able to continue working even when I waiting for one of the kids to get out of sports practice. My wife will be able to use the GPS to find suppliers for her new business. Our daughter won’t be the only girl in ninth grade who doesn’t have a texting plan with her phone.”

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Tricia Duryee

@triciad Jun 7, 2009 1:10 AM ET

Posted In: Companies, Apple, AT&T, Palm, Sprint Nextel

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Alice

I don't plan to buy this phone, and yes, I am an iPhone fan, but I'm really happy that it'll give Apple a run for its money… more competition means Apple will have to work harder at improving the next iPhone. And MS gets pushed further into irrelevancy in the mobile space. Seriously, they must be panicking in Redmond.

Inventory Launcher

The first-buyers of the Pre, especially customers with iPhones, could be unlocking the device and using on Verizon. The iPhone unlockers have become Pre first-buyers. With the Pre inventory shortage, Sprint missed its mission. Sprintâs mission is managing churn. The Pre inventory level had to meet two criteria. Firstly and most importantly, there had to be enough stock to offer the Pre to every existing Sprint customer that was replacing their phone or had a contract expiring. Secondly, at Best Buy and Radio Shack, the Pre inventory level had to be sufficient to offer the Pre to customers of any carrier replacing a phone or evaluating their contract. The worst scenario is for store staff to say that âWeâre out of the Pre, but let me show you other smartphonesâ. The Pre hype fed both phone bait-n-switching and carrier switching. Sprint should have estimated the replacement and renewal prospects in Sprint, Best Buy and Radio Shack stores during the next 30 days. Then the inventory formula is: Inventory Launch = 30-day Selling Opportunity. Sprintâs claim to build Pre demand detracts from the churn mission. The five âflopâ factors for the Pre have been previously described in the June 3rd mocoNews.net. Sprint ignored the risk management of flop probability.