Pricing wars: Palm Pre vs. iPhone 3G

(Credit: Bonnie Cha/CNET)

By now, most of you know that Palm and Sprint finally announced that the Palm Pre will be available nationwide on June 6 for $199.99 after a $100 mail-in rebate and with a two-year contract on Sprint's Everything Data plan or Business Essentials with Messaging and Data plan.

The Pre's price was one of the key pieces of information missing when I did a basic comparison of the Pre and iPhone 3G (with OS 3.0) back in March but now that we have it, I thought it'd be a good time to revisit the topic and do a comparison of the data plans and overall cost to the customer. After all, as important as the features are to the user, I'd argue that people are just as concerned about getting the best value for their money.

A couple of months ago, my colleague David Carnoy wrote a column stating his case about why Sprint must price the Pre at $149. The $199 price tag puts it on the same playing field as the iPhone (going on the basis that we're comparing the 8GB iPhone), but a more aggressive $149 price point would have to given the Pre an edge over the iPhone and the $179 T-Mobile G1.

Clearly, Palm and Sprint didn't listen, but that said, I think the price is fair. Yes, the mail-in rebate is annoying, but $199.99 is reasonable for what you're getting and with its line with the competition. Also, I have to disagree with David on one point and say that Sprint offers a more enticing data plan, in my opinion.

Let's compare. Just as an example, an individual Sprint Everything Data Plan starts at $69.99 for 450 minutes and unlimited text messages and unlimited data, including the carrier's various services, such as Sprint Navigation and Sprint TV, which are both supported on the Pre.

(Credit: Corinne Schulze/CNET)

On the other hand, AT&T first requires a $30-per-month data plan and then it's $39.99 for 450 minutes (with rollover minutes) and $20 a month for unlimited text messaging, so you're looking at a total of $89.99 and you don't even get the extra services. The $20 difference adds up to quite a bit of savings over the months if you're a Sprint customer.

Will that be enough to win over customers from other carriers? Well, that remains to be seen but like the BlackBerry Storm, I believe there's enough interest and excitement built up from when the Pre was first announced at CES 2009 that initial sales of the smartphone will be swift and steady.

Of course, the question remains whether the Palm Pre will actually live up to all the hype in terms of functionality and performance and continue to grow sales over the months. As we've said in the past, as much as Palm needs the Pre, the smartphone is just as important to Sprint, which has trailed the other carriers in iconic devices.

[iroq321]

better phone (at leas on paper), less expansive monthly, makes me want to jump ship. but then again i'd be jumping to sprint, that could be it's biggest flaw (so far). not that i have had personal experience with sprint service, but i know a few people who are not the happiest with them.

[monkeyfun14]

Remember though that a few bad experiences don't make a company horrible even Apple has stepped on atleast a few customers toes.

[inverse137]

uhh, and the same can't be said for AT&T? No cell provider is known for customer service. It cost money to have qualified people sitting around answering the phone. It is not a revenue generator.

Sprint has HORRIBLE customer service, yes. But I like their data plan better than AT&T's.

If you have to call ANY cellular provider you go step by step and don't assume the person on the other end of the phone will follow through. YOu have to call back the next day and confirm.

OK, with that said...

Why, exactly, is the PRE getting so much coverage? it's not like Palm has been relevant for the last 5 years. Yes, The Treo was the FIRST smart phone that worked...well, sort of. I personally went throught 5 Treo 600's in 12 months....yes, FIVE. All were warranty repairs.

But I diverge...

Palm has had moments of brilliance and moments of, well, FOLIO, but I would hardly say they can compete with the upcoming WinMo 6.5 and NO WAY they can top the iPhone. And Blackberry? please.

[iroq321]

@ inverse137
sure, the same could be said about at&t, which is why i'm not with them either. and to say that the pre can't compete with the iphone, winmo, or blackberries is irrelevant until it actually launches and is in your hands to see first hand. but so far, it has the potential to top at least the current half-a$$ed iphone.

[bender123]

Feel free to knock the Sprint of 3 years ago, but whatever they did in the past 24 months has worked...Responsive customer service, 3G all over the place, a stable network and great prices. I switched due to Sprint 4 years ago because of cost and hated it at the beginning, but now I am re upping for the Pre. The Sprint of the last two years has been a joy to work with...I had a tech support person, once, that was so friendly I had to extricate myself from the call, because she was being almost "too" personable.

Give them a chance, they are different and definitely better.

[nomadic28]

I have had nothing but good experiences with Sprint's customer service, which is why I'm staying for the long haul. They've worked with me through so many issues, where other companies would have told me to stick it.

[Fil0403]

Well, it may prove to be better than the iPhone, but I doubt it will be better than the BlackBerry.

[taranfx]

nice comparison here one more tht u guys might b interested in

http://www.taranfx.com/blog/?p=1330
<a href="http://www.taranfx.com/blog/?p=1330">Palm Pre vs. iPhone 3.0 3G S vs. Windows Mobile 6.5 - Feature Comparison Showdown</a>

[rdean]

Sprint has actually been getting better in the customer service area.

I think the Palm, despite its smaller form factor, is a superior device to the iPhone in that the Pre has a faster processor and can deal with multitasking. However, given that iPhone has mindshare going for it, a lower introductory price could have helped get into some areas that already have iPhone on the brain.

[slapppy]

It will be irrelevant. The very reason Palm is rushing this product early is because of Apple iPhone 3.0 and the new iPhone. It basically sends Palm back to the drawing board when announced. The very reason they cannot announce this later. Without a robust ecosystem, App store, iTunes Music/Movies/Poscast/AudioCast/Games Like Need For Speed Undercover, Palm is dead in the water.

[Aaron Kempf]

Apple iPhone is nothing but a toy. Nobody was forced to do anything.. if APPLE sold more than one model, they wouldn't even be in the top 10 smartphones

[tcr071]

The iPhone 3.0 public beta was a direct response to Pre... not the other way around. The iPhone needs a software update to match the features the Pre will launch with. Palm won't be going back to the drawing board because they'll still have features on day one that Apple or AT&T has yet to give to iPhone customers... such as free turn by turn GPS.

[slapppy]

@Aaron Kempf

Umm no, Windows/PC is a toy. They have the market on games. Thats a toy platform. The Pre is also going to be one model. Without a robust ecosystem, App store, iTunes Music/Movies/Podcast/AudioCast/Games ( Like Need For Speed Undercover, 2xl Motocross, Sims ) Music Videos, iTunes University, more 3rd party add on and specialty products to keep anyone happy, best of all mobile developers are all saying iPhone is the best platforms to develop on. Check your sources, the majority of these developers are now focusing on the iPhone/iPod Touch FIRST, the rest are just an afterthought.

[DrtyDogg]

rushing this product early. . . really? You are reaching hard for that one. And one more thing, iTunes blows.

[SlimGem]

@Aaron Kempf,

Apparently your brain is a toy. Try to wind it up once in a while.

[rattyuk]

@ tcr071

"The iPhone 3.0 public beta was a direct response to Pre."

Yeah like Apple could knock out a beta to the devs in the time between the pre announcement and actually doing it.

[celticbrewer]

There's people who will never buy apple and people who are dumb enough to always buy apple. There's a market for the Pre, iPhone, BlackBerries, etc... Deal with it!

Also, if you think a PC is a toy, you should probably talk to the millions of corporations that have them, but no macs, on every employee's desktop. We have over 30,000 here and zero macs.

[schudogg]

I Have Sprint for 8 years now. I must say I LOVE SPRINT. Yes, customer service not the greatest sometimes, but they have taken over 20% off my bill since I started because I have been with them so long. They have given free upgrades with very little hassle as well. As for coverage, other then in the northwoods of Wisconsin I have never had a problem with reception and their network is by far the fastest out there(compared to friends on other networks) And lets not forget AT&T is the Worst network other then T-moble out there and yet they are doing so well because of the Iphone. So lets not beat around the bush and say it is the network that makes the phone and not the other way around, because if that was true AT&T would be out of buisness.

Lets all remember EVERY carrier is going to try to screw you one way or the other so if your friend or friend of a friend had sprint and didn't like it, well all I have to say is you can ask that of any carrier and I am sure you will find people who hate it.

Don't deny yourself a Combination of an Iphone and Blackberry just because of Sprint. Once your use their network you will notice how fast it is and thank me.

[djstewpac]

I just got a phone call from sprint for my 12month ann. as a customer with them, they knocked five bucks off my bill.

nothing AWESOME, but still pretty cool.

[geo825]

wasnt the iphone $600 when it first came out?

[inverse137]

$600 with no contract.

[jhootska]

it sure was.. and in fact they would offer any special pricing to sign a contract either.. when it first came out you paid $600 no matter if you signed a contract or not.. they didnt start offering carrier discounts until months or maybe a year later when the initial buzz began to quite.. but to the consumor, this doesnt matter.. all they care about is now.. and now the iphone is $199.. so, they wouldnt pay anymore for the pre eventhough its a better device.. thats economics..

[jhootska]

wouldnt* sorry

[ballmerisanape]

It also had no competition.

[techiepizzaguy]

Great article Bonnie, but you didn't even discuss the savings on two phones with Sprints family plans vs. AT&T. I love GSM as well as AT&Ts service, but I couldn't justify how much two plans would cost compared to the Sprint plan.

[Haasbat]

The monthly plan I have from Sprint, for being an 11 year customer, is quite the bargain. 1200 anytime minutes, unlimited nights/weekends, 500 text messages, unlimited data, and basic Sprint TV: $45. Throw in the last phone I got for free, and it's a no-brainer. No wonder people are giving up landlines left and right. And really, i rarely have dropped calls, and my broadband rarely has bandwidth problems (and they are corrected quickly, as well). Most impressively, in the last year, Sprint is always calling me to see how I'm doing and see if there is anything they can do for me. And if I call, they always follow up to make sure my questions were answered. They even called last weekend, just to "check in." Of course, my first question was, "When is the Pre coming out?" and she said within 3 weeks. Maybe I will get a good deal on one of those too, with a new contract.

[inverse137]

Uhh, not to burst your bubble, but I can go to sprint and get the same deal....it has nothing to do with being a "loyal" customer for 11 years. The loyalty is only good if your check clears.

I have unlimited EVERYTHING for sprint for $99. So, technically, I have infinite more than you for only twice the price and I haven't been with them for 11 years.

[vbowker]

@ inverse137

Uhh, not to bust YOUR bubble, but Haasbat said $45.
$45! You said $99.
Maybe it's just me, but given the choice, I would rather pay $45 than $99.
Yes, anyone can pay $99 and get EVERYTHING. And?

[qoman50]

One thing the article didn't mention, AT&T night time minutes start at 9PM and end at 6AM, Sprint, 7PM to 7AM.

[lightwave300k]

The $69.99 plans doesn't include Sprint Navigation and Sprint TV. Sprint will charge extra for the services according to sprint representative i called. However, They say you can use GPS feature without Sprint navigation software.

[bonnie.cha]

Hmm, interesting. Sprint's site doesn't make any distinction between the $69.99 and $89.99 Everything Data plan as far as what services are included:

http://nextelonline.nextel.com/NASApp/onlinestore/en/Action/DisplayPlans?filterString=Individual_Plans_Filter&id12=UHP_PlansTab_Link_IndividualPlans

I'll try to clarify with Sprint.

[scottc127]

According to Sprint's Palm Pre website, the $69.99 does come with Sprint Navigation and Sprint TV. Which bring me to another point: why are Spring Customer service reps so ill prepared to handle questions? I've sent two email messages to ask the same question to Spring and gotten 2 completely different answers. Most of the people that buy this phone will be (1) converts from another carrier (for which the pricing information applies) or (2) current Sprint customers that won't bail because of this phone. It appears that with this launch, Sprint has no information for those of us that are in the second group. You'd think that with a bet-the-company phone that the Pre is, they would have been better prepared.

[jhootska]

well, i work for sprint and i can insure you that every everything data package includes sprintTV and sprint navigation at no extra charge.. so, throw another $40 worth of extra stuff on your phone for free!! rather than going with a inferior device that is highly overrated, go with a service that is ba far cheapier and a device that is by far more functional and all around better.. get off the apple bandwagon and realize there are better devices out there and that besides the appstore and ipod function, the Iphone is garbage.. its just a toy.. Not a smartphone!

[darkpoet25]

It DOES include SprintTV, but just the basic form I believe. You can add more channels, but you pay per channel, which is nice if you only want to add certain ones. I think the same goes for the music channels as well, is that correct jhooksta?

[Brad_in_FL]

Well, I have 2500 shared minutes, unlimited text, unlimited picture mail, unlimited data/web on my two non-smart phones for $100. I would stay with Sprint and upgrade to the phone if they would let my "unlimited data" apply towards a smart phone. I haven't called yet to check, very doubtful they will. But I couldn't imagine using more data than I already do on my phone. I check Facebook, Gmail, the weather, news, etc, several times a day. As soon as I upgrade to the Pre, they want a heck of a lot more money. Heck, I have 4 phones on that plan, and pay $140 for all 4 phones sharing 2500 minutes with unlimited everything else.. I really hate this Unlimited Data plans they have now. Seriously considering going to MetroPCS for 4 phones with unlimited calls and text for a mere $80. Getting tired of this nickel and dime crap.

[Aaron Kempf]

I have unlimited data plan on sprint, and 2500 minutes for $125/month (for 2 phones) and then I get a 25% discount because my brother works for / at Boeing

[shaiyd]

"so you're looking at a total of $89.99 and you don't even get the extra services."

What "extras" do you claim to not get with the iPhone once you've paid for your minutes, texts, and data plan? The data plan provides unlimited internet access via wifi and/or 3g, and gps. iTunes covers all your other media, and if you don't feel like paying for it, u can find it all online for free.

my single biggest complaint about the iphone that hasn't been addressed with the 3.0 software build, is flash support. if the Pre has that, i'd say it has a chance. if not, it can fall in line behind the G1, Dream, Blackberries, and all the other much hyped "iphone killers" that hold 2nd place and down.

[Aaron Kempf]

itunes sucks, it's got to be the worst program of all time. I use a blackberry on sprint, and I'll use whatever program I want to -- in order to copy music to my phone.

with iTunes / Apple, you're crippled to the lowest common denominator and I just think that the Apple software has the most atrocious usability anywhere

[DrtyDogg]

@shaiyd - "much hyped "iphone killers" that hold 2nd place and down"

You do realize that the iPhone is not in first place don't you?

[rattyuk]

OK aaron, keep ya hair on!

We get it. You don't like Apple.

[Aaron Kempf]

you guys are insane, sprint gives the best coverage of anyone! and they're leaps and bounds ahead of anyone else for 4g coverage.

[gba2000]

Um, no, AT&T and Verizon do. Sprint sold lots of their towers recently resulting in even poorer coverage.

[danny_v]

sprint has the best coverage and the palm pre is the first 4g phone phone running on the only 4g network which means sprint has the fastest network.

[Brad_in_FL]

You know what is ridiculous? The $60 jump to add a line from the Family/Shared Unlimited Data to Unlimited Everything.. per freaking line!? That really should be per account. If you're already paying the insane $100 for one freaking phone, or $189 for two phones, anything after that should be $20 per phone.

As mentioned, Sprint has come a long way in Customer Service. 3 years ago, if I upgraded a phone, it would take several calls to get the billing right. Now, it is very simply. I can turn add-ons off and on at will online, and only get charged the days I use it. I don't have to call anymore to fix billing.

I think the last time I dropped a call was about 8 years ago? I used to drop calls on occasion going over a bridge here in the Tampa Bay FL area, but, not anymore.

The only thing I've been disappointed with was their lack of useful phones. I'm a geek, no doubt. And if the iPhone was reasonable price with plan, I would have jumped. I was hoping the Instinct would have been my savior, but with those Everything plans, ugh.. I've had to stay where I'm at with crap like the Samsung M520 and the LG Rumor.

Soooooooo.. I'll probably be stuck where I'm at, forever, with junk phones because I refuse to pay that kind of money just so I can ignore the check out lady that much more..

:D

[keebler021]

You can also go with the an Everything Data Family plan at 1500 or 3000 minutes shared, at 129.99 and 169.99 respectively. This includes the first 2 phones and each line after is 19.99. The only difference between these and the Simply Everything plans are the minutes. It still includes Sprint Nav, TV, and Radio, as well as unlimited data, texting, and picture mail.
Just thought I'd throw that out there ;)

[checodaman]

I <3 Cardinal Health 24% monthly discount =D!!!

[joeshmoefromoregon]

I have had sprint for the last 9 10 years and Most of the time have been very happy I do have to explain to them from time to time when somthing is not right. But I can tell you there customer service has gotten way better. I would say they have bent over backwards with all the changes my kids have wanted with there phones. I give them a 10 out of 10 . I am excited to get the new phone and stay with sprint . As far as I am concern if sprint stays a secret for a while its all good with me. I did have att and they were not user friendly they would not work with me and they were expensive. Verizon has never had a phone that i wanted and friends who do have them complain about there phones but all say they have great customer service.

[cs2368]

Sprint has the best pricing plans hands down. The AT&T plans with their Iphone 3g and smartphones will break your pockets. I pay 99.99 for SIMPLY EVERYTHING because I use my phone for business and personal. I'm on the phone for hours everyday. Their customer service is ok if you get the right rep. Nobody is perfect., but Sprint has the best plans and have no DROPPED calls unlike AT&T! Sprint just need to get more phones in the lineup.

[anilsudh]

So how come they are bleeding customers!!!

[gerrrg]

I hate it when companies offer mail-in rebates. No doubt, Sprint has already figured out the number of people that won't do a mail-in rebate, and therefore they have priced it accordingly.

I vote with my money, and do not buy things with mail-in rebates.

I think the $299 price without a rebate will still keep the Pre in the ballpark, except that feature for feature, nothing makes the Pre stand out from the pack, so either you like the design of the Pre and Sprint's service, or you don't.

[-Roddly]

Best Buy is going to sell it at $199 with an instant rebate, no mail-in rebate crap, according to some other news sites.

[BIgzxammux]

the Biz Essentials with 450 min and unl data and sms does in lcude navagation and spring tv... and yes you will use the web more with the pre.... I know you will

[atish505]

This is a CDMA 750MHZ phone. CDMA sucks and is a dead technology. Even if this phone is unlocked it would not work on any network unless it is CDMA 750 MHz and there are only a handful of these still in existence in the world.

[frosty77]

It's still widely used in places where this phone will be sold, so by definition is not a "dead technology". If it works and works well, nobody care? Tech-geek biases have zero impact on customer adoption. All that matters is usability.

[BigKnox]

"Sucks" and a "dead technology" . . . Umm, and where do you get that info from? I have had sprint for 8 years, and I have had the same EVDO rev A phone for about 3 years or so, and as far as speed and connectivity goes, it blows a lot of other phones out of the water. I'm in the military, and I work in a hanger, and I am the only one who gets service...correct that...good service... with out having to go outside and hunt down a signal. Everyone else suffers from interference and what not. I would hardly call it a "Dead technology". BTW, did you know there are talks about developing Iphones for Sprint (EVDO/CDMA) and Verizon? Hardly dead now, isn't it.

[jo311843]

WOW!, I had to create an account just to refute this claim. So hear goes, as far as technology goes, CDMA is newer than GSM. Second, Sprint doesn't use 750Mhz bandwidth, they use the 1900Mhz bandwidth, much better for data transmissions. Also if CDMA were so bad, then why oh why is AT&T using a variant for their new 3G network? Yup, they are using WCDMA, or Wideband CDMA. They had to change because while GSM works fine for voice and SMS, it can't compete with CDMA for data.
Now Verizon uses the 800Mhz bandwidth for CDMA, and if you want to say the largest carrier is wrong, then go ahead. But I doubt they would have the largest network if it really did suck as bad as you say it does.
So assuming that the Palm Pre is a dual band CDMA device, that would mean it will work on Sprint's 1900Mhz network and Verizon's 800Mhz network.
Now if you are ranting becuase you didn't like Verizon, that is fine, I don't really care. But for AT&T, the big GSM provider, to pick WCDMA for its 3G network, well, I guess that means that GSM is the dead technology.

[paulimusmaximus]

Who cares if the price is the same. Saving $50 over the iphone wouldn't get me to switch from ATT to Sprint, just like I would like to have an iphone, but there's no way I'm switching from Verizon, because ATT coverage is crappier than Verizon in my area, and most people I know have Verizon, so I can talk to them without wasting my minutes. They could try to give me a free iphone, or pre, and I still wouldn't switch.

[eizenga13]

HATE MAIL IN REBATES??? Go to Best Buy Mobile. They are hands down the most capable and readily available customer services reps in the business.... and they are neither on commission or make you do a mail in rebate, everything is OUT THE DOOR pricing!

Simply put head to Best Buy Mobile on the 6th, get your Phone, accessories, and plan for a better price than anyone can come close to out the door... PERIOD!

[darkpoet25]

I agree with you here. They answered all my questions I had and were truly customer friendly. They often have weekly sales on phones as well.

[paulimusmaximus]

Yeah, I got an LG Env2 for free there when it was $79.99 at the Verizon store, and I was just signing up to Verizon, and they waived the activation fee too. Plus they had no problem putting me on my sisters family plan either. They definitely don't have the biggest selection of phones for each carrier, but they usually have the most popular ones at an oftentimes cheaper price than elsewhere.