It has been over three years since Apple released the iPhone.  Back in 2006, I was impressed with the iPhone but I didn’t think it was such a game changer especially given its high price.  Looking back I was wrong, since it has taken three years for another competitor to emerge than can actually compete with the iPhone.  After numerous of devices claiming to be iPhone killers, only one actually provides the ease of use and features than made the iPhone so popular.  Palm surprised the world at CES 2009 with the announcement of the Palm Pre.  Reviews have praised the phone, especially its WebOS operating system.  Sales of the Pre haven’t been steller, but I believe this will change as the device is released worldwide and people learn more about the phone and its capabilities.  The important aspect is that Palm is doing all the right things as it reintroduces itself in the Smartphone arena.   Palm has both a CDMA and GSM version of the phone which allows the phone to be marketed to almost all cell phone users worldwide.  In the US, CDMA is extremely popular with both Verizon Wireless and Sprint supporting the technology.   When Sprint’s exclusivity contract expires, Verizon Wireless will at last have a phone to rival that of the iPhone.   This is huge since Verizon Wireless is the largest wireless provider in the US and can increase customer awareness of the Palm Pre far better than Sprint.  Additionally Palm is coming up with a cheaper version of the Pre called the Pixie.  This is important since there is huge demand for Smartphone’s at low prices.  Currently Smartphone are hovering in the $100 to $200 range, but once a Smartphone can break under $100, their popularity will explode.  Few companies have tried going after the lower end Smartphone market, and Palm’s approach could provide it with crucial gains in market share.  While Palm might be late to the game compared to the competition, it has shown that it has the right stuff to make a large impact in the market, just like it did with its Palm Pilot.

Sprint-Nextel’s stock has plummeted in the last year and now can be had for under $3 a share.  The market cap of the company is now under $7 billion and it has been losing money for the last couple of quarters.  Sprint-Nextel has many issues with the largest being the high rate of customers that are leaving for other wireless providers.  While these are large problems that need to be fixed, the net worth of the company without any customers is worth significantly more than its current market cap.  How is this possible?  The answer is the network and spectrum that Sprint-Nextel owns.  Many in the wireless industry believe Sprint-Nextel’s ownership of spectrum in the 1900Mhz and 2.5Ghz bands to be worth easily tens of billions of dollars.  This is just the FCC licenses without the cellular network which would cost many more billions to replicate.  This leaves Sprint-Nextel as an exceptional buy for any company wanting to get into the wireless arena.  The wireless arena will continue to be the hot ticket far into the future as today’s generation expects the Internet to be mobile.  It would be much cheaper for a company such as Google to buy Sprint-Nextel than to deploy its own network.  While the world economy is just beginning its journey through a black hole which will probably last many years, the opportunity to pick up a company at a fraction of its value in a high growth and evolving industry is very very rare.