Sprint breaks its sales record with Palm Pre

Sprint Nextel executives said Monday that the launch of the much anticipated Palm Pre on Saturday hit a new sales record for the company.

Neither Sprint nor Palm is discussing specific sales figures, but Tim Donahue, vice president of business marketing for Sprint, said that the launch exceeded the company's expectations.

(Credit: CNET )

"We experienced our best one day of sales and single weekend sales for any phone we've launched in our history," he said. "We sold out of the device over the weekend in most of our store locations. And it happened at a much faster rate than we had planned on. "

While the crowds that showed up on Saturday morning to buy the Pre at Sprint stores and other retail locations where the phone was offered were small in number compared to the crowds that have gathered for the past two iPhone launches, analysts are calling the launch of the Pre a success. A J.P. Morgan report estimated that more than 50,000 phones were sold in the first two days the phone was available. The Wall Street Journal cited analysts who said that between 50,000 and 100,000 Pres had been sold.

Now Sprint and Palm must wait to see if the momentum will continue. Donahue said the company plans to replenish inventory at retail stores as quickly as Palm can get the devices shipped. Customers can sign up to be on a waiting list for devices and will be notified when a phone is available. Donahue said that these lists should help the company direct new phones to locations with the highest demand. But he admitted there could be shortages and delays in getting the Pre into customers' hands.

"I'll be honest," he said. "There will be constrained inventory for some time. And there will be spot shortages for the foreseeable future."

But Donahue said the company will do everything it can to sell as many Pres as it can. Still, it will be interesting to see how well the Pre continues to sell now that Apple has just announced the next-generation iPhone, which will be outfitted with new processing guts to give it more power and speed. The iPhone 3G S will come with 16GB of storage for $199 with a two-year contract and a 32GB version that will sell for $299 with a two-year contract. Apple is also releasing a big software upgrade. The 3.0 OS is loaded with new features for old and new iPhone users. The latest versions of the iPhone and the software upgrade will be available next week.

In addition to the new phones and new software, Apple also slashed the price of its 8GB iPhone 3G to $99, which could put pressure on the Pre. Sprint is offering the Pre, which also has 8GB of storage capacity, for $199 with a $100 mail-in rebate.

Even though the Pre has an impressive touch screen that is similar in function to the iPhone, it may actually compete more with Research In Motion's BlackBerry devices than the iPhone. The Pre's physical keyboard and the phone's ability to handle multiple functions at once, much like a computer can, make it a good device for business users, Donahue and other executives have said.

But Donahue stops short of calling the device a BlackBerry-killer. After all, Sprint also sells quite a lot of those too.

"When you look at our customer base, the lines are blurred today versus five or 10 years ago," he said. "Subscribers use their phones for business as well for personal use. It isn't an either/or situation. And here is a device that I think is the best crossover device for business and personal use in the marketplace today."

One thing is for certain, Palm and Sprint are banking on the phone's success. For Palm, the Pre offers a chance to get back into the smartphone game. And for Sprint, the Pre provides a window of opportunity to attract new customers and retain old ones with a cool device that will show off the new and improved Sprint network.