However, analyst Amir Rozwadowski cautioned that rising costs and problems with older products could affect profits. Palm has had six consecutive quarters of losses and has had to raise cash for the Pre's launch.

The Palm Pre will be the first phone to use Palm's webOS system and will be offered exclusively in the U.S. by Sprint Nextel through the end of the year. The Pre will be offered exclusively in Canada by Bell Mobility's 3G network.

Palm has been working on webOS for years and CEO Ed Colligan has been touting its ease of use for developers. Colligan has said that if a developer can write XHTML, CSS, JavaScript and Ajax, he can write code for the webOS platform .

Getting it right the first time is crucial, especially with more companies moving from offering pure mobile phones to smartphones. While mobile-phone makers are dealing with a 15.8 percent drop in shipments in the first quarter, converged mobile phones known as smartphones continue to grow year on year, according to a recent report by IDC.

"Some of the big operators in mature markets have shifted product portfolios and some have smartphones accounting for as much as 50 percent of the entire handset offering," said Ryan Reith, senior research analyst with IDC's Mobile Phone Tracker. "We believe this strategy will continue, along with an increase in devices that are media- and messaging-centric, to help operators maintain revenues."

The Palm Pre will have EVDO, Wi-Fi, Bluetooth stereo, 8GB of storage , and a fast processor. It will have a thin, curvy 3.1-inch touchscreen; a three-megapixel camera with flash; a removable battery; and USB 2 connectivity. If the touchscreen fails, there's a vertical slider QWERTY keyboard.

The Smartphone has notification bars that alert the user of text messages and calendar appointments. The Pre also uses Palm Synergy to bring Outlook, Google and Facebook together on one calendar.