Palm, iPhone Battle in Price War

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Are you a Sprint customer thinking of upgrading to the Palm Pre, but you're not eligible for a free or subsidized device upgrade? Better start saving your pennies, because an out-of-contract Pre is going to run you $550, according to Engadget. That's $50 less than the $600 an out-of-contract iPhone 3G costs existing AT&T customers, but Palm's Pre is still packing a similar and equally hefty price tag.

The news comes after yesterday's announcement from Palm that the Pre would launch on June 6 on Sprint's Now network for $199 with a two-year commitment. Just like the out-of-contract price, a $199 price tag puts the Pre in direct competition with the iPhone 3G on AT&T. However, when you factor in the cost and value of competing voice and data plans, the Pre fares better than its Apple competitor.

Competing Plans

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When you slap down $199 on June 6, Sprint makes you commit to a choice of two-year voice and data plans. The best value on Sprint is its Everything plan, which costs about $100 a month. That's a massive monthly bill, but Sprint gives you unlimited -- well, everything -- for that price, including unlimited data, calling, text messaging, and GPS plus access to Sprint TV. If that sounds like too much, you can opt for a lower priced plan that runs you $70 with 450 daytime minutes, free nights and weekends after 7 p.m., plus unlimited data and text messaging.

On the other hand, if you picked up an iPhone 3G today, your costs would skyrocket compared to the Pre. As with Sprint, you have to plunk down $199 for an iPhone and sign up for a two-year commitment, but the data plan is where AT&T ratchets up the cost. A comparable Everything plan on AT&T costs $30 for data plus $100 for unlimited talk, and then another $20 for unlimited text messaging. All told, that puts you at $150 per month for unlimited access, and that's without the added bonus of Sprint TV or GPS. AT&T doesn't give you any relief with a lower-priced plan, either, since an equivalent 450-minute voice plan plus data and texting is going to run you $90 on AT&T as opposed to $70 with Sprint.

Voice and Data Plans Only Half the Story

The downside of the Pre, however, is it's largely an untested device. Nobody has really had their hands on it in recent months, so it's hard to know how far along the device has come since its early reviews. In January, PC World's Ginny Mies and Melissa Perenson were largely impressed by the device but complained of some hardware problems, including disappointing camera specs and an uncomfortable physical keyboard.  Those problems may have been overcome, but really there's no way to know until Palm and Sprint release the Pre on June 6.

With the iPhone 3G, on the other hand, you know what you're getting because the device has been put under a microscope since its launch in 2008. Reviews for the iPhone 3G have been very favorable, and excitement is building around the launch of the next iteration of the iPhone OS this summer. There's also the added bonus of the iPhone App Store with thousands of programs to choose from including mapping, gaming and social networking applications. Palm is currently developing its own third-party development community, but it will take some time for Palm to compete with Apple on the applications front.

So, while the Pre wins out on cost, overall value and experience on the Pre is still a big question mark. But in just a few weeks, things should start to clear up, unless, as rumor has it, Apple surprises everyone with a brand new iPhone device.

For comprehensive coverage of the Android ecosystem, visit Greenbot.com.

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