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Palm Plans to Sell Unlocked Treo

Palm's decision to sell an unlocked Treo Pro, its newest smartphone aimed squarely at enterprise customers, could either be the start of a new trend or a sign that the struggling company may face even harder times to come, one analyst said.

In a break from tradition in the U.S. mobile phone market, Palm on Wednesday introduced the Treo Pro and said it will sell the smartphone unlocked. That means it won't be marketed, sold and subsidized by an operator.

"It may be the beginning of a trend but it may also be a bad sign," said Bill Hughes, an analyst with In-Stat. While he said he had no reason to think this is the case, there is a chance that Palm couldn't find an operator interested in picking it up.

In Europe, O2 and Vodafone will sell the Treo Pro, which will also be available unlocked. Unlike in the U.S., it's common in Europe for people to be able to easily buy unlocked phones. Telstra will sell it in Australia.

The Treo Pro, which runs Windows Mobile and includes Wi-Fi and GPS (Global Positioning System), will become available later this year on Palm's online store as well as from other Internet sites, retailers and enterprise resellers.

While there are reasons that some enterprises might be interested in buying unlocked devices, Palm might struggle to sell the new Treo to individuals without the help of operators. In a recent survey of technology users, Hughes found that 85 percent of them bought their phones in an authorized retail store, such as an operator shop or a store like Radio Shack that has deals with operators to sell phones.

But buying unlocked phones can allow an enterprise buyer to better negotiate with mobile operators, Hughes noted. That's because typically operators factor in the cost of handset subsidies when selling airtime to enterprises.

In theory, having unlocked phones could also allow an enterprise to negotiate a better deal from a competitive mobile operator and easily switch to that operator by simply providing users with a new SIM card to insert in their phone. However, in the U.S. that's not a major benefit, given that operators use multiple incompatible technologies. The Treo Pro runs on the third-generation technology used by T-Mobile, an operator not typically favored by enterprise users, and AT&T.

Operators do already sell unlocked phones to enterprises, but they don't typically widely publicize the option, Hughes said.

The Treo Pro doesn't come cheap: It will cost US$549. It's difficult to compare that price to other popular phones because most, like the iPhone, require a multi-year service contract with an operator in the U.S. In Europe, Vodafone Italia sells the 8G-byte iPhone 3G without a contract for €500 (US$734).

The Treo Pro is an attractive device that in some ways resembles the iPhone; it's one of the first phones to come out of Palm since Jon Rubinstein, a former Apple engineer who contributed to the creation of the iPod, joined the company. It features a solid black case on the back with rounded edges. It has a full Qwerty keyboard and touch screen.

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