Palm Pre set to battle Apple's iPhone

There's a new kid in town, iPhone. It's the Palm Pre and it wants to fight.

There are many reviews of the Palm (PALM) Pre cell phone, which is being sold at Sprint (S) and Best Buy (BBY) as of June 6. Since I don't have a Pre to review, here's the bottom line from the reviews I've read: The Pre is in the same league as the iPhone.

If you haven't purchased an Apple (AAPL) iPhone because it doesn't have a keyboard or because you don't like AT&T's wireless service, the Pre may be for you. Although the keyboard is small and its battery life is short, the Pre is on par with the iPhone, whereas the touch-screen Blackberries, from Research in Motion (RIMM), and the Google (GOOG) Android phone are not.

Since the iPhone is the competition for the Pre in the world of smartphones, here's a summary for iPhone-lovers and Phone-haters alike, from Bloomberg News' technology columnist Rich Jaroslovsky. "If you have an iPhone and love it, the new Palm Pre won't make you throw it away," he wrote. "But if you are one of those tempted by the new generation of smart phones who hasn't yet taken the plunge, the Pre is worth a long look."

David Pogue of The New York Times says the Pre is "elegant and joyous," and comes close to beating the iPhone. "That's no surprise, really; its primary mastermind was Jon Rubinstein, who joined Palm after working with Steve Jobs of Apple, on and off, for 16 years." Rubinstein hired folks from Apple and elsewhere and "challenged them to out-iPhone the iPhone," Pogue wrote.

Walt Mossberg, technology columnist for The Wall Street Journal, says the Pre is a "beautiful, innovative and versatile hand-held computer that's fully in the iPhone's class." Mossberg considers "the Pre to be potentially the strongest rival to the iPhone to date."

The Pre will be in short supply at first, a move that Rubinstein must be emulating as it worked marvelously for Jobs with iPhone 1.0, 2.0 and will again for 3.0, which may be out this month or next, reports have suggested. The limited supply strategy worked for Nintendo as well when it launched its Wii video-game console.

Here's the formula Palm is hoping works with the Pre: Make a wonderful product that people desire. Help create demand by creating a shortage that causes a frenzy as buyers can't get the product, which makes customers want the product more. Use the media to market the product as the mania gets coverage. All of this helps sustain demand, which, in turn, helps the product sell.

Palm has initiated the process. Step 1: Palm created a cool phone and it's being mentioned in the same sentence as the iPhone. Step 2: Create demand, helped by an ongoing shortage of the product.

Can Palm follow through on Step 3? Success -- meaning sales and sustained credibility -- for the Pre and a revitalization of Palm. Over the next few months, we'll find out if the Pre is a pro.

Anthony Massucci is a senior writer for DailyFinance. You may follow him on Twitter athianthony.

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