Palm unveils new Treo in shadow of iPhone debut

NEW YORK (Reuters) - Palm Inc PALM.O on Monday introduced a new high-end Treo mobile phone, hoping to challenge the BlackBerry's dominance with business users, but its debut fell in the shadow of the launch of Apple Inc's AAPL.O debut of its less pricey new iPhone which sold more than 1 million units over the weekend.

Palm's new Treo 800w smartphone is seen in an undated handout photo. REUTERS/Palm/Handout

Shares of Palm closed down nearly 2 percent after Palm unveiled its 800w smartphone, available for $250 after signing up for a service contract with its wireless carrier partner Sprint S.N, and a $100 rebate.

By contrast, Apple’s iPhone 3G, which sold more than 1 million units over the weekend, sells for about $200, nearly half the price of its previous version. Apple’s stock closed up 0.75 percent.

The lower price has spurred iPhone rivals to keep prices low, such as Samsung Electronics Co Ltd's 005930.KS recently introduced "Instinct" -- also available via Sprint -- which is set at $130 after rebate.

“Despite recent price cuts in the smartphone sector, the new Treo is priced at $249.99 with a two-year contract, making the 800w model one of the most expensive smartphones offered at Sprint,” said CL King & Associates analyst Lawrence Harris in a client note.

Smartphones like the Treo, iPhone and Research in Motion’s Blackberry Curve -- which sells for $149 after rebate according to Sprint’s Web site -- offers features such as a high speed Internet connection and access to email, and documents.

The new Treo comes with a full keyboard, which the iPhone lacks. Both have “Wi-Fi” wireless Internet capability, satellite navigation systems, and built-in digital cameras.

Palm executive Brodie Keast told Reuters that the Treo is primarily meant to take on the Blackberry’s dominance among business users, but acknowledges that the iPhone has drawn a lot of attention. But, he says there remains a lot of room for growth in the smartphone market.

“It’s also a very large market,” he said. “We don’t need to defeat RIM or Apple in order to succeed.”

Shares of Palm fell 11 cents to $5.42 on Nasdaq.

Reporting by Franklin Paul; editing by Carol Bishopric