What a Way to Start a Week: Pre & iPhone 3Gs Arrive

One has to feel the pain for Palm after the struggling handset maker debuted its long awaited Pre smartphone this past weekend to little fanfare.

Palm's biggest news of the year, and likely the last few years, is now nearly a dusty memory given Apple’s product announcements late yesterday.

Not only has Steve Jobs and company pushed out two new iPhones (called iPhone 3GS) — 16- and 32-gigabyte devices costing $199 and $299 respectively with two-year data plan contracts — Apple sliced the 3G's 8GB handset price, which will remain on sale, to $99. The "s" stands for speed — the handsets are faster and more feature-rich than the initial one-year-old second-generation product.

Palm is banking big time that the Pre, heralded earlier this year as having a break-through Web OS, needs a winner to keep alive, remain a player in the toughest competitive mobile device market and thwart a potential sale or even takeover thanks to its failing stock price and market share.

The only thing that would have completely pushed the Pre’s arrival into oblivion would have been Jobs taking the stage at Apple’s annual conference yesterday but he was a no-show. Instead, Philip Schiller, Sr. took the wrapper off the new iPhone 3G S, a new MacBook Pro family and Apple's Mac OS X Snow Leopard platform.

Whether Jobs' decision not to appear, despite blogsphere rumors he was going to headline his company’s event, is tied to his health issues or something else, thankfully, did not launch the embarrassing media frenzy that a six-month leave of absence did earlier this year.

The new iPhone 3Gs boast video filming capacity, an enhanced camera and some neat software integration features.

But the more compelling aspect with Apple's news is whether, in this economy, consumers and companies are still willing to fork over $200 for a new iPhone.

While I do believe the 3G’s lowered price point will entice some non-iPhone users looking to upgrade handsets — and bolster AT&T’s subscriber ranks — I’m not completely convinced more memory, video and better picture taking will have the same impact on current iPhone devotees.

While smartphones aren’t viewed as luxury items any more — heck more than a few of my teenager’s friends debate the pros and cons of Research in Motion’s Storm vs. Curve handsets — I do believe the national economic environment is changing smartphone user buying and using behavior.

We’ll find out for sure on the next go-round of earnings reports from Palm, AT&T, Verizon Wireless and Apple whether the blush is off the smartphone.