Palm Inc. has introduced the Centro, its first low-cost, consumer-oriented smart phone, a product the company hopes will help it tap into the growing demand for more powerful multimedia handsets.
Palm chief executive Ed Colligan, speaking at the DigitalLife conference in New York on Thursday, said that by putting advanced smart phone capabilities into a standard-size cell phone, Palm hopes to appeal to mainstream phone users who are ready to upgrade to a more versatile device.
The Centro, he said, "is meant to be the center of your life, both your business and personal life. We're trying to reach a new demographic."
The phone will sell for $99.99 and has a compact design, considerably smaller than Palm's Treo devices, which have remained largely unchanged for several years. The Centro offers instant messaging, personal and corporate e-mail support, media player, touch screen, QWERTY keyboard and high-speed 3G data access.
The phone, which runs on a Palm operating system, will be available in mid-October exclusively with a two-year service agreement from Sprint-Nextel. It comes in black and red, and will feature Sprint's live TV service as well as easy access to Web sites such as YouTube, Yelp and Google Maps.
Danny Bowman, Sprint's vice president of customer equipment, said the Centro combines a wealth of features at a low price, which should make it popular for the holiday season.
The heat has been on Palm to keep up with competitors like Research In Motion, Nokia, Motorola and, more recently, Apple with its iPhone. Critics have wondered when Palm was going to refresh its lineup of phones, which have sold solidly to business users but haven't kept up with the growth in the overall smart phone market.
The growing competition has not been kind to Palm. The company's profit slid 43 percent to $15.4 million in its fiscal fourth quarter, which ended June 1.
But Colligan said the future is bright for Palm as it competes in a fast-growing market. Market research firm IDC is projecting that U.S. smart phone shipments will grow from 13.8 million in 2007 to 74.4 million in 2011.
Analysts aren't sure that the Centro alone will turn Palm's fortunes around. But the device is a good start, said Tavis McCourt, an analyst with Morgan, Keegan & Co.
"This is the direction Palm needs to go in," he said. "It may not be as successful as the BlackBerry Pearl, but it's nice incremental growth for Palm. It certainly answers some of the critics. They're saying they get it, that customers want things smaller - thinner phones with more multimedia features."
Miro Kazakoff, an analyst with Compete Inc., said the Centro will help Palm stay in the burgeoning smart phone game. He said his research has found that now 20 percent of consumers say they are at least casually considering buying a smart phone for their next cell phone purchase, up from 5 percent at the beginning of last year.
"We used to call these 'enterprise devices,' but now we're seeing general consumers shop for them," Kazakoff said. "Now, all the smart-phonemakers need to make devices that are oriented toward consumers."
News of the Centro sent Palm stock up 6.3 percent, or 97 cents, to close at $16.40 per share.
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