Google's New Phone Is More Bad News For Palm

palm pre cheese

Palm’s flagship smartphone, the Pre, will have even more competition this Christmas on Sprint (S) store shelves. That’s not going to help sales, which are already said to be below expectations.

Sprint announced today that it will start selling the attractive new HTC Hero, which runs on Google’s Android OS, this October. This means that Sprint will offer at least three high-end smartphones this Christmas: The Pre, the HTC Hero, and RIM’s BlackBerry Tour.

It’s likely that Palm and Sprint will continue to heavily advertise the Pre — it’s recently been advertising like crazy on the Food Network, for instance. But the point is that it will definitely not be the only logical purchase anymore when buyers go into a Sprint store. (And wow! When’s the last time Sprint had a decent handset lineup?)

Pre sales are already sagging, according to a recent Wall Street report. Barron’s editor Eric Savitz, writing yesterday:

Town Hall Investment Research analyst David Eller asserted in a research note this morning that sales of the Pre “are continuing to slow,” and “likely will come in dramatically below” Sprint‘s (S) reputed target of 1 million to 1.5 million customers for the year. Eller now sees the company selling 416,000 units in the August quarter overall, down from a previous estimate of 488,000. For the November quarter, Eller expects the company to ship 785,000 units.

The reduced estimates, Eller contends, is less a failure on the part of Palm as “overly ambitious expectations in the face of a weak retail spending environment, competition from the iPhone 3Gs” and the slowing development of the Palm rival to the Apple App Store.

Photo: Gizmodo

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