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  1.    #1  
    The Wall Street Journal

    NOVEMBER 19, 2009, 6:55 P.M. ET

    Retailers Slash Price on Palm’s Pixi


    By ROGER CHENG And NIRAJ SHETH

    Amazon.com Inc. and Wal-Mart Stores Co. have slashed the price of Palm Inc.’s newest smart phone, the Pixi, by 75% to $24.99 after only a few days on the market.

    The Pixi is the sister phone to the Pre, which has been positioned by Sprint Nextel Corp. as its flagship device for much of the second half of the year. Palm hoped the lower-cost device would attract younger users, much like the older, slim-sized Centro two years ago.

    In addition to slashing the price on the Pixi, Amazon is selling the Palm Pre for $79. Both offers require a two-year contract with Sprint, which sells the Pixi for $99 and the Pre for $149.

    Palm’s new handsets, while well reviewed, haven’t been smash hits, analysts say. While cellphones typically get discounted over time, the quick descent of the Pixi’s price tag is jarring. The Pixi was released last weekend.

    “In the long term, Palm runs the risk of ruining the price potential once Amazon and Wal-Mart are done with it,” said Phil Cusick, a technology analyst at Macquarie Capital.

    A Palm spokesman said the company doesn’t have a say in how third-party retailers like Amazon and Wal-Mart price its handsets. He declined to comment further.

    A spokesman for Sprint declined to comment.

    With a particularly strong lineup of smart phones from Sprint this holiday—including the BlackBerry Tour and HTC Hero—it is tougher for Palm to stand above the crowd.

    For Amazon, it’s an indication of the flexibility that the online retailer has on the prices of its phones. In September, the company held a one-day sale for all AT&T Inc. cellphones—excluding the Apple Inc. iPhone—for a penny. That included the high-profile BlackBerry Bold from Research In Motion Ltd.

    The latest discounts will likely mean more sales in the short-term and could give a subscriber boost to Sprint, but customers could also eventually get used to the lower pricing, hurting Palm’s ability to keep the prices at standard levels.

    Smart phones generally cost roughly $300 to $500, but carriers often will pay a subsidy to get the price lower in exchange for a contract. Retailers such as Wal-Mart, RadioShack Corp. and Amazon have been more willing to eat some of the cost in order to sell the device at a discount. The retailers get a cut from the carriers for each sale, a bounty of roughly $100 to $200 a piece, said Mr. Cusick.

    Write to Roger Cheng at roger.cheng@dowjones.com and Niraj Sheth at niraj.sheth@wsj.com

    Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved
  2. #2  
    I think this is an example of someone with a preconceived idea (no pun intended), looking for data to backup the belief determination he's already made.

    I say that based on this line:

    [QUOTE[Amazon.com Inc. and Wal-Mart Stores Co. have slashed the price of Palm Inc.’s newest smart phone, the Pixi, by 75% to $24.99 after only a few days on the market.[/QUOTE]
    Wal-Mart has not cut the price, it's "Let's Talk", a third party dealer. But the bigger truth behind that part of the story is that it wasn't done "after only a few days on the market" - it was done before the Pixi was released!!

    So, the price mark down had nothing to do with the reception of the Pixi, because it wasn't out yet.

    Both vendors, Let's Talk and Amazon, have "opt-out" penalties above and beyond your normal ETF. They are making the money up through the payment they get for the contracts from Sprint.

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