Palm Pixi smartphones now just $25

You can now buy the brand-spanking-new Palm Pixi smartphone for just $25. Onlie reports say Amazon and Wal-Mart have slashed the original retail of $100 by 75%, less than a week after Palm's second webOS phone went on sale at Sprint, which still holds to the original price.

It's a jarring price cut for the Pixi, which Palm was aiming toward a younger audience than the more advanced and pricier Palm Pre, released last June. Both retailers also chopped the price for the higher-end Pre, from $150 via Sprint to $80. All prices are based on a two-year phone contract (the unsubsidized prices are much higher; $399 for Pixi and $549 for Pre).

These aren't the only brands being dramatically repriced. Amazon is still offering some popular smartphones, including the BlackBerry Bold, Curve and original Storm for just one penny. The recently released Motorola Droid is being offered for $150, compared to Verizon's price of $200.

Both Palm phones run Palm's innovative webOS, a Linux kernel married to the open source Webkit Javascript engine. It's a combination that lets developers use HTML, Cascading Style Sheets and HTML instead of a specialized programming language to write native applications for the two phones.

Slideshow: Smartphones for the holidays

But the Pre has not been a breakthrough bestseller, and it faces still more intense competition from a flock of new rivals, such as the Motorola Droid on Verizon, along with other phones running the Android operating system, and the continued strong sales of the Apple iPhone.

It's not clear how well the Pixi will do, given its internal compromises of a slower processor and lack of Wi-Fi, which means it relies solely on Sprint's 3G network for connectivity. The Wall Street Journal's Katherine Boehret found a lot to like in the new phone. "But this processor's speed is slow enough to notice immediately and it robs webOS of its lightning-fast speed," she writes, in a review this week. "The Pixi's progress indicator -- a spinning, white circle -- appeared on my screen too often."

The cost and performance tradeoffs can shackle the Pixi's user experience. Boehret notes that Palm recommends running no more than seven programs at once on the Pixi, compared to up to 10 on the Pre. That's a reflection of the webOS multi-tasking capability, something not available to developers on the iPhone. "But my Pixi stuttered with just five programs -- sometimes fewer -- opened," Boehret writes. "I received an e-mail containing one digital photo, and the process of opening just the e-mail -- not even the photo -- took about 10 seconds." It took three tries to finally upload the same photo to her Facebook account. 

A New York Times headline this week wondered if Palm's comeback is losing steam. Palm CEO Jon Rubinstein, a former Apple executive, says the company doesn't need to be as big as its rivals to thrive. But then, he was quote as saying, "One of the key things we need to do as a company is to get to scale….We need to bring on more carriers and more regions."

But Merril Lynch stock analyst Vivek Arya repeated this week his enthusiastic "buy" rating for Palm, following a meeting with Rubenstein and other top executives. A recent sell-off in the stock creates a good buy opportunity for a company that can continue to differentiate itself, expand to new carriers and regions with an attractive smartphone platform. Barrons' Eric Savitz reported on Arya's conclusions in his blog. 

Arya specifically described Palm's plan to introduce application purchases via a URL click, an innovation that will make it easier for users to discover, assess and buy webOS applications. And, he says, Palm is adding 50 to 100 new applications to its online catalog every week.

The company currently has $570 million in cash to execute it's business plan, Arya wrote.