Bringing smart phones to the masses

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In addition to being priced lower than other smart phones, the Centro has tried to address design issues. In essence, the Centro is a smaller version of Palm's Treo 755p. It works over Sprint's 3G wireless network. It supports Microsoft Exchange Direct Push to allow users to get work e-mail. And Sprint has provided easy access to Web-based e-mail such as Gmail, AOL and Yahoo, along with access to common IM platforms.

"The Centro is a very nice form factor that is small enough to compete with a standard feature phone," Colligan said. "It's also priced like a feature phone. Yet it has all the power of a Treo."

Analysts say they expect the Centro to resonate well with some price-conscious consumers, especially as it's introduced following the major hype of Apple's iPhone. On the one, hand these products don't compete with one another at all. Priced at $400, the iPhone addresses a totally different market segment. From a features perspective, the phones also won't likely compete. Not many people will buy the Centro as a combination phone/media player. And it's unlikely that longtime Palm users, who may want a sleeker design, would give up access to their corporate e-mail for an iPhone.

But the frenzy around the iPhone this summer has certainly elevated the conversation around smart phones, which Palm's executives hope will help sell Centros.

"There's no question that the iPhone has sparked the imagination of people who would not have otherwise looked at devices like this," Colligan said. "Apple did a beautiful job executing on the design of this product, but when people really compare them side by side, they'll see they can get a lot of advanced features, like 3G wireless access, in a product that is a quarter of the price."

The iPhone operates on AT&T's slower 2.5G network, but unlike the Centro it also offers Wi-Fi access.

While it's true that the Centro is on a faster network than the iPhone, in many respects the device's design is still way behind Apple's iPhone. For example, Centro's touch screen doesn't even approach the functionality or design of the iPhone's screen.

But Palm's biggest problem is the perennial thorn in the company's side: the ancient Palm OS Garnet. That operating system was originally designed for PDAs, not Treos, and while Palm has done a great deal of work to make Garnet into a smart-phone OS, the company still hasn't released a major update since 2004. Palm has been trying to release a new operating system that preserves the Palm heritage, but it has been delayed several times, and now won't be available until next year.

Until Palm comes up with an operating system that rivals Apple's OS X, Symbian or Windows Mobile (which Palm also offers), it might have trouble attracting smart phone converts looking for something new and cool. The Centro at least updates the industrial design of Palm's products, but beautiful and useful design involves more than hardware.

"The iPhone has raised the bar in terms of what a cell phone could be," said Sean Ryan, a research analyst with IDC. "In a way, Apple is educating the market. And people see what a cell phone is capable of."

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