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Palm Needs to Expand Market for Pre Phone: Analyst

Palm has had some success with the new Pre smartphone, but still needs to develop a middle-ground market for the device, an analyst told CNBC.

“Palm needs to use this time between now and Christmas to hit the ground running,” said David Eller, analyst at JRPG. “If they are very successful they could be the Yahoo to Google.”

Palm reported better-than-expected quarterly earnings on Thursday but gave softer-than-expected guidance for its fourth quarter. Top executives also refused to comment on the growing speculation of a possible takeover of the company.

Eller said the new Pre features similar characteristics to Apple's iPhone.

“If you want to have access to the features of an iPhone, but also have a separate keyboard as supposed to typing on the screen, that’s one of the very big features,” Eller said. “The feedback on the Pre is pretty good, but the iPhone is the favorite."

The JRPG analyst remains confident that Palm could fight for the middle ground.

“Will they be able to do a million units at the end of they year, we think that is probably it,” said Eller. “Expectations may be a little bit higher, but it is still going to be a successful launch.”