Sprint Drops Palm Pre to $99 — for Limited Time

Update: Shortly after this blog posted, Sprint yanked the offer.

We’d been hearing for days that Sprint was planning to cut the price of the Palm Pre smartphone, which it sells exclusively (at least for now) in the U.S. Earlier reports put the new price around $150 — some $50 clams off the current $199, with a two-year service contract.

But the actual news is even better. Sprint is slashing the Pre’s price in half to $99, but only until October 31. The $100 service credit will be applied to new customers’ accounts within three invoices, according to the fine print on Sprint’s Website.

What does it all mean? For consumers who’ve been mulling a move to the Pre, the half-off discount is a strong motivation to make the leap. Smartphone service plans remain pricey — the cheapest Pre plan starts at $70 a month — but Sprint’s fees are in line with those of its leading competitors, including AT&T, the U.S. exclusive carrier of the iPhone.

Sprint’s Pre sale could also be a preemptive strike against Verizon Wireless, which plans to offer the Pre in early 2010. It’s likely that Sprint, the number-three U.S. wireless carrier that’s struggled since merging with Nextel in 2005, is aggressively pursuing new customers before Verizon becomes a direct competitor in the Pre marketplace. And what better way to draw fence-sitters than with a blowout deal?

Another possibility is that sales of the Pre, which debuted in June, have been disappointing. According to a Reuters report, Piper Jaffray analyst Chris Larsen believes the Pre discount could mean that Sprint is having trouble signing up new customers.

It’s fair to say the Pre hasn’t generated anything close to the rabid consumer enthusiasm that accompanied the debut of the iPhone in 2007. And some industry watchers blame Sprint for the Pre’s tepid reception. That could change, however, as Verizon — and ultimately other carriers — begin to offer the phone. Personally, I think the Pre’s an excellent handset that has been underappreciated thus far. A lower up-front price may be the push it needs to draw customers, particularly those who’ve heard of the iPhone but not the Pre.

One thing’s for certain: The trend toward cheaper phones will continue. Recent examples: AT&T offers the iPhone 3G for $99; Verizon is cutting prices on most of its smartphones to $99; and Sprint will sell the HTC Hero for $180.

Now, if they’d only do something about those pricey service plans.

Contact Jeff Bertolucci via Twitter (@jbertolucci) or at jbertolucci.blogspot.com.