The battle for cell phone customers continues: Palm Pre coming to Verizon Wireless

Last week Verizon Wireless’s COO confirmed that the carrier would be begin selling the Palm Pre smartphone in "˜early 2010′. It’s no surprise that the Pre will wind up at both CDMA-based carriers eventually.  However, it is surprising how soon the device will be available from another carrier after its initial exclusive launch at Sprint in June 2009.The stakes could be high for Verizon Wireless here. Sure, they are the largest wireless carrier in the US, and the Palm Pre will be a great addition. But their last flagship device, the Blackberry Storm, fell short of its astronomical expectations, frustrating many who saw the Storm as a bona fide rival of the iPhone. If a Verizon Wireless Pre launch falls flat in the absence of another “blockbuster” device, the chances of attracting that ever-elusive iPhone killer could be slipping away.I got out my crystal ball (i.e. Compete’s online behavioral panel) to better understand who is shopping for the Palm Pre today, and what that could mean for the move to Verizon Wireless.

Carrier Customers’ Interest in the Palm Pre

Share of interest by carrier for online carrier customers that viewed the Palm Pre, June 2009.

Naturally Sprint customers are more active in researching the Palm Pre – they have immediate access to it and have received the bulk of targeted advertising for it. Still, few VZW customers looked at the device on Sprint’s website – no more or less than AT&T customers or T-Mobile customers. Is this an early sign that the Palm Pre won’t be as successful at VZW as Sprint? Or could it mean that these customers are so satisfied with VZW that they would never even think of switching carriers?

Incentives are a big factor in answering those questions (subsidies, rebates, offers, etc.) and since we don’t have any information about Verizon Wireless’s incentive plan we can’t really answer them. But there is a specific group of people that help us dig a bit deeper. They are who we call "˜pre-churners’. A pre-churner is someone who is a current customer of one carrier, but is actively shopping on other carrier websites. It is a measure of how many customers are thinking about jumping ship, making them an important group to monitor and measure on a regular basis. If a large proportion of Verizon Wireless’s pre-churners are shopping the Palm Pre, bringing the device on board may help retain those customers. If not, Verizon Wireless may want to look at which other devices do attract their pre-churners.

Verizon Wireless Pre-Churners’ Interest in the Palm Pre and iPhone 3G S

Percentage of VZW’s pre-churners that viewed each device online at the associated carrier during June 2009.

The 1.7% of VZW pre-churners interested in the Palm Pre is actually about 50% less than that of Sprint or T-Mobile pre-churners, suggesting that bringing the Palm Pre to VZW won’t actually help the carrier retain some of its riskiest customers. On the other hand, VZW’s 14.8% pre-churner interest in the iPhone 3G S is over 40% higher than that of pre-churners from Sprint or T-Mobile. Since online wireless shopping is largely concentrated at carrier websites (and traffic to iPhone-specific pages on dwarfs traffic to Palm’s website anyways), I think it’s safe to say that AT&T’s exclusive deal on the iPhone still appears to be a major pain in Verizon Wireless’ side.

Will the Palm Pre be the golden ticket Verizon Wireless is looking for? It’s a solid device that should benefit from Verizon Wireless’s large customer base and keep them squarely in the press. Yet, you have to think that Verizon execs can’t sleep easy at night knowing their riskiest customers are actively shopping a competitor despite their best efforts to bring new, innovative handsets to the carrier.  Will the Palm Pre be a success for Verizon Wireless in acquiring and retaining customers? I guess we’ll find out in 2010.