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Cheaper iPhones, hotter Blackberrys, disappearing Palms

December 19, 2008 |  5:20 pm

It will be a while before the smartphone war is won, but the battlefield is heating up this holiday season.

First, on the heels of the news (confirmed by just about everyone BUT Wal-Mart and Apple) that Wal-Mart will be selling a $197 iPhone come Dec. 28, Best Buy said today that it soon would cut the price on the iPhones it sells to $189.99 and $289.99, according to Bloomberg News. It's hard to see how a $10 price cut on Apple's in-store price would lure many customers to Best Buy. But hey, maybe some guy who needs that extra $10 to feed his family will now decide to splurge on a new smartphone.

Meanwhile, BlackBerry maker Research in Motion announced its earnings Thursday, which were of no surprise to anyone because it had pre-announced them earlier this month. But analysts are pleased with how BlackBerrys are selling, despite the economy.

"The last five weeks have been strong for RIM, while the cellphone industry struggles to find a bottom," wrote Broadpoint AmTech analyst Rob Sanderson in a note. "We believe that relative strength is not a near-term anomaly but highlights the early stage of smartphone penetration and RIM’s market position."

So, BlackBerrys are in demand and iPhones are getting even cheaper. Good news, right? Well, not if you're Palm.

The company also announced its earnings Thursday, after market close, and the news wasn't too surprising. That probably didn't make them any less painful, though: Revenue fell 45%, and second-quarter net loss widened to $506.2 million, or $4.64 a share. Palm is having trouble competing with the BlackBerry and the iPhone, analysts say.

"Things are tough," wrote Avian Securities analyst Matthew Thornton in a note.

Palm is expected to unveil a new device at the Consumer Electronics Show in January, which analysts hope might turn things around. But with things going the way they are, it's going to have to be a pretty inexpensive smartphone to win battles against RIM or Apple any time soon.

-- Alana Semuels

Photo: Things are looking pretty gray for Palm. Credit: existentist via Flickr