Last Updated Apr 1, 2010 2:52 PM EDT
There are a few reasons that retailers -- and when it comes to handsets, that's what carriers are -- drop prices:
- create a loss leader to bring in customers and open the opportunity for other sales
- adjust the price level to stimulate more demand, often with the financial support of the product vendor
- get rid of inventory that has been slow to move and make room for something else
That leaves dumping inventory. Now take into account two other reported factors of the promotion. The Pre models come under the buy one-get one free category and Verizon has cut the price of the webOS mobile hotspot service, which lets the Pre act as a Wi-Fi router, from $40 to $0 for both new and current customers. Current customers with a Pre can add the service for nothing.
The Palm Pre has done poorly for Verizon since day one. Given the red-hot rumors that Verzion will eventually get an iPhone from Apple (AAPL), there is no reason for the carrier to keep on with products that do nothing for the bottom line. And that's bottom-line bad for Palm, given that AT&T (T) has put off introducing the Pre. I was giving Palm until the end of the year, but I wonder if it can go another six months at this rate.