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Palm's Centro Tells Foes: 'Talk to the Hand'

Gary Krakow

Case in point: Palm(PALM Quote), which was No. 1 in smartphones for years and years before others started to pass it by. So, instead of folding up shop completely, Palm innovated. It took its tried-and-true Treo technology and shrunk it. Not in functionality, but in size and price.

The result is the Centro currently being sold by Sprint(S Quote) and AT&T(T Quote). It is a great small design, with lots of functionality as well as truckloads of personality.

So, it doesn't do BlackBerry mail like Research In Motion (RIMM Quote) products -- but can do Exchange mail like Windows (MSFT Quote) Mobile phones -- and it does the kind of email that most phone buyers use (POP and IMAP). It keeps your appointments and lets you surf the Web, take photos, listen to music and all the other good stuff.

Its keyboard is smaller than the Treo's, but the wizards in the Palm labs have actually made its keys easier to use. Despite its small size, I find that it's easier to type on the Centro than on many other smartphones.

It's also a great cell phone (something that is not always a given these days).

But, and I've left this for last, its best feature is its price. Whether you buy one from Sprint (S Quote) or AT&T (T Quote), a Palm Centro will cost you only $99 with a two-year cellular plan. That's $99 -- not $200, $300, $400, $500 or more.

It's no wonder that the Centro has been hugely successful for Palm. How successful, you ask?

According to a recent Bloomberg dispatch, Palm Centro sales are through the roof. At the same time, a much better known smartphone's sales has suffered in comparison.

Palm had 13.4% of the market for advanced phones in the first quarter, up from 7.9% in the previous period. That's according to research firm IDC.

At the same time, iPhone's(AAPL Quote) share of sales fell to 19.2%, down from 26.7%. But RIM's BlackBerry continued to dominate the market with 44.5%, up from 35.1%.

Some of the iPhone softness could be a direct result of not always being able to find one to buy. In the past few weeks, iPhone stocks have disappeared from Apple stores possibly/probably in anticipation of the new iPhone2 model, which could be announced as early as next Monday.

Apple, which made a bold sales prediction for this year of over 10 million units worldwide, has also been busy signing up foreign cellular companies to sell their phones everywhere on the planet. So while sales might be down for now -- expect things to start jumping when iPhone2 actually goes on sale.

There are also rumors that Apple may be planning a limited-feature $200 iPhone model. $100 would be better.

And there's upcoming competition coming from phones that run on Google's(GOOG Quote) Android OS, two new BlackBerrys (Bold and Thunder), the Garmin(GRMN Quote) nuviphone, Sprint/Samsung's Instinct, SonyEricsson's(SNE Quote) Xperia and others.

But all of this takes nothing away from the Palm Centro who figured out how to make a smartphone "for the people." They are the majority of cell-phone buyers on the planet and spend, on average, $100 or less on a new handset. Palm was able to parlay its high-tech phone technologies with low-tech prices -- and it is now reaping the rewards.