Verizon Slashes Palm Smartphone Prices

Verizon Wireless has slashed prices on Palm smartphones, and is offering buyers a second phone at no additional cost.

The nation's largest wireless carrier dropped the prices of the Palm Pre Plus to $50 from $150 and the Pixi Plus to $30 from $50. In addition, buying one of the smartphones gets you a second one at no charge.

To sweeten the deal further, Verizon Wireless is throwing in the Mobile Hotspot application for the Palm devices for free. Once downloaded, the application makes it possible to use the phones as a mobile Wi-Fi hotspot for up to five devices at once.

While Verizon Wireless has always given away the application, the carrier charged for connecting devices. Under the promotion, subscribers can make use of the Palm app for free, and the carrier is extending the free service to current Palm customers, too.

Verizon Wireless launched the promo less than two week after Palm reported that the number of its smartphones sold to people plummeted 29% during its last fiscal quarter to 408,000 units. At the same time, the company has shipped 960,000 phones to stores and carriers, which means there is lots of excess inventory.

Verizon Wireless spokeswoman Heidi Flato denied the company was holding a free sale to lower inventory.

"This is a competitive business. Promos of this type are part of doing business in a retail environment," Flato told InformationWeek in an email.

Indeed, Palm announced last month that Verizon Wireless rival AT&T would sell the Pre Plus and Pixi Plus through its stores and online in the "coming weeks." An exact date wasn't given, but AT&T was expected to sell the Pre and Pixi for $150 and $50, respectively, after a $100 mail-in rebate.

Nevertheless, there's no doubt that Palm is experiencing tough times. The smartphone pioneer has seen its market share fall as competition intensifies from larger players, such as Apple, Research in Motion, and makers of smartphones based on Google's Android operating system.

Palm had hoped to gain market share following the release a year ago of a new operating system, called webOS, which was the foundation of a new line of smartphones led by the Pre. Instead, Palm has lost share and some analysts have said the window of opportunity may be closing, as Android phones continue to gain ground, RIM's BlackBerry retains its hold on the corporate market, and Apple's iPhone grows stronger in the consumer market..