O2 to Offer Palm Pre for Free in UK

When the Palm Pre smartphone makes its debut in Europe on October 16, it will be offered by O2 for free with a two year contract in England. It lists in the U.S. for $249.99 in the US, or $149.99 with $100 mail in rebate, although Walmart is currently offering it for $79.99 (with 2 year contract). In Germany, O2 customers will get the phone for the equivalent of $70 with a two year contract, or $700 without a contract. O2 has an exclusive agreement with Palm to sell the Pre in the UK and Germany. O2 also has been offering the iPhone 3Gs for free with long term contracts, so it must offer at least as good a deal on the Pre, a less popular phone.

The device has had disappointing sales results, less than one million units in its first three months on the market. Compare that to the one million iPhone 3GS Apple sold in its first three days. Palms smartphone operating system, WebOs, and its line of smartphone devices will have a hard time surviving against offerings from Apple, not to mention Blackberry, Windows Mobile and Android based devices. The free Palm Pre might look like a bargain, but over the life of the UK contract, according to an article in theStreet.com, customers will end up paying $1,711. This compares to a U.S. user who has Sprint's lowest cost plan, who will end up paying $1,830 over the two years. The Sprint plan includes unlimited data, texting and messaging, 450 anytime minutes per month and unlimited weekends and nights.

Palm will no doubt survive, with its Centro and Treo devices, but the ultimate fate of the Pre is not so clear.