Palm announces new Pixi smartphone – potential boost to Sprint and Qualcomm
Yesterday’s note of the day discussed how Sprint has been trying to improve its appeal to mobile phone subscribers by strengthening its smartphone offering with the Palm Pre and the Google phone. Today, Palm announced the Palm Pixi, a new smartphone to be offered by Sprint in time for the holiday season.
The Palm Pixi is primarily targeted at younger, non-business phone users and is expected to be priced lower than the Palm Pre. With the Pixi, Palm and Sprint are targeting a large segment of the mobile phone market that is yet to own a smartphone. If successful, the Pixi could help Sprint better retain subscribers and attract new ones.
Within Sprint’s content on our platform, you can see how the company’s share price would be impacted if the Palm Pixi (along with the Palm Pre and the Google Phone) were to help stem losses in the Number of Sprint Subscribers.
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In addition to helping Sprint retain subscribers, the Pixi will drive sales of Qualcomm’s mobile phone chipsets leading to a boost in Qualcomm’s market share within the chipset market. Qualcomm’s chipsets were chosen over chipsets from Texas Instruments that are currently used in the Palm Pre.
Qualcomm’s chipset market share has declined from 81% in 2005 to 66% primarily due to Samsung, a key customer, diverting some its chipset purchases to other suppliers. We believe that Samsung and LG will continue to diversify chipset suppliers leading to further declines for Qualcomm’s chipset share. Additionally, Qualcomm competitor Infineon is gaining share as a result of its recent deal to supply chipsets for the iPhone. The Palm Pixi, however, may slow the rate of decline depending on the success of the phone.
Mobile Phone Chipsets constitute 42% of the $45.71 per share Trefis price for Qualcomm. Within Qualcomm’s content on our platform, you can see how the company’s stock would be impacted by if Qualcomm Chipset Market Share were to decline less than the Trefis forecast because of the Palm Pixi.