Palm's Pixi smartphone flies into youth market

SAN FRANCISCO -- Let the smartphone wars begin again.

Palm on Wednesday will unveil a sequel to its Pre, the Pixi. The teeny iPod Nano-like device is a smaller version of the Pre smartphone, aimed at younger customers.

Palm won't discuss pricing. Analyst Ben Bajarin of technology consulting firm Creative Strategies expects it to retail for $99 with a two-year contract.

Sprint will start selling the phone by year's end. And in a bid to boost sales, Sprint today drops its price on the Pre to $149, from $199, plus a two-year contract. Palm's combination phone/music and Web device is seen as a viable competitor to Apple's iPhone.

Unlike the Pre, the Pixi doesn't have Wi-Fi, which means it can't be used to access the Internet outside of Sprint's network. It also has a smaller screen, keyboard and camera — two-megapixel to the Pre's three-megapixel.

For now, Apple — which today holds an event here to show off new iPods — dominates the smartphone market, with sales of some 17 million iPhones.

Bajarin says Apple's success with the iPhone "finally showed consumers what a smartphone could be, and why they should want one, and that's why you see everybody race to the smartphone market."

Thursday, Motorola will unveil its new smartphone based on Google's Android operating system. So far, the only Android phones have come from Asia's HTC.

When the Pre was introduced in June, many tech analysts said it was a "make or break" moment for a Palm comeback. Palm, a leader in handheld devices in the late 1990s and early 2000s, lost significant market share through the years to Research In Motion and its BlackBerry devices, and more recently, to the Apple iPhone.

Katie Mitic, a Palm senior vice president, wouldn't discuss specifics about Pre's sales, except to note that "Palm is back. We're really happy with the launch."

Bajarin estimates that Palm has sold just under 1 million Pre phones in the past three months.

The Pixi is the second phone using Palm's new WebOS software. Mitic calls it the "thinnest, smallest phone we've ever created."