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.

The Apple iPhone 3GS was released just a couple weeks ago.  When it was announced earlier this month, I was surprised by the lack of hardware upgrades.  I believed that this new iPhone would leap in front of the competition just like it did back when it was released in 2007.  Instead, Apple revealed that its goal was to make improvements without affecting its profit margin.  The new iPhone doesn’t have a super high resolution screen nor a high resolution camera, instead it builds upon what has worked successfully in the previous models.  By limiting the hardware improvements, such as omitting a high resolution screen, it can keep its high profit margins and thus give iPhone users something to look forward to each year (Update: A tear down of the hardware has revealed that it costs Apple about the same to produce the new iPhone as the last one).  The slow improvements cycle for the iPhone has allowed competitors to enter the space.  This is clearly seen with Palm introducing the Pre which bas bettered Apple in some crucial areas.  Microsoft has been working on Windows Mobile 7, which could allow them back into the smart phone game which they helped pioneer.  Regardless it is an exciting time for smart phones, and Apple’s competition will only grow fiercer over the next twelve months.