Palm Handhelds Pre, Pixi Dropped from RadioShack

The bad news just keeps coming for Palm, as carrier Sprint has confirmed that one of its major retailers, RadioShack, is dropping the Pre and Pixi phones in favor of newer models from other vendors.

It's the latest in a string of negative developments for the smartphone vendor, struggling to stay afloat as its sales decline.

The lack of Palm (NASDAQ: PALM) handhelds at Radio Shack was first noticed by investment advisors CL King & Associates. The firm said in a research note on Monday that RadioShack had been offering both Palm models for free with a service contract, "probably in order to clear out inventory," in the last few weeks, and now there were none for sale in RadioShack stores.

A RadioShack spokesperson said in an e-mail to InternetNews.com that for competitive reasons, it does not normally discuss details about inventory and distribution of specific devices, and added "Palm has been a good partner in our growing mobility business and we expect that relationship to continue."

RadioShack, currently in the process of renaming and rebranding itself "The Shack," doesn't quite have the luster of a giant like BestBuy, but it is a large presence in U.S. retail, with 4,600 stores as of last year, according to its annual report.

"Everyone looks at RadioShack as out-of-date, but they sell a lot of phones, they are in a lot of small towns and malls. So it is a big deal when they decide to take a model off the shelf, and right now Palm can't afford to lose anybody," said Jack Gold, president of J.Gold Associates, a market research firm.

But Sprint confirmed the product phase-out. "RadioShack is phasing out both Palm Pre and Palm Pixi for two newer devices from Sprint. This is in line with RadioShack's normal product planning process -- there is a designated amount of space in stores for handsets and they work to keep the line-up of devices as current as possible," said a Sprint spokesman in a statement e-mailed to InternetNews.com.

"Which means they only stock what they can sell, that's what it means if you read between the lines of that statement," replied Gold. "Look, I don't blame them. There is a limited amount of space. So what are you going to stock, something you sell three of or something you sell 300 of?"

Calls to Palm requesting comment were not returned.

On top of all its other problems, Palm's phones are getting long in the tooth. They were introduced 16 months ago and have been on the market almost a year. Every vendor refreshes quickly to keep their products up to date and the Pre and Pixi are approaching their shelf life.

"The cell phone market is consumer-driven. If you don't have buzz and don't have ads out there, people forget about you quickly," said Gold.

Andy Patrizio is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.