Here is a demonstration of the most important features by someone that thinks the Palm Pre can compete with the iPhone:
I have written about companies that tried to kill the iPod. And I rightfully predicted that they are not going to make it. I think the Palm Pre will fail for similar reasons.
The Palm Pre may be competitive from a UI perspective (although I personally do not like the shape of the device). But there is more to it than having a device and a UI:
Like with the iPod Apple does not just provide a slick device but rather a complete ecosystem. The iTunes Application Store seems to become a success and it is as easy as can be to get certified (secure) applications installed on the device. The OS on the iPhone is MacOS X, so it is quite simple for existing MacOS X developers to jump onto the iPhone and develop applications with their know-how. Steve Jobs learned from his biggest mistake at NeXT: while NeXTSTEP was a superior system there were not enough applications available and developers were not interested because the NeXT market was tiny and they needed to learn a complete new system.
Palm would have to compete with that as well. I suspect the missing developer base will inhibit the wider adoption of Palm Pre in the market. The Palm ecosystem needs to be complete and all players in that ecosystem need to have provisions and ready made options to enter that domain at a low cost. Palm could make the Pre a success by offering it at a very aggressive price: there are enough people that would like to have an iPhone of they could afford one.
But Palm needs to do more than copying: They need to innovate. I do not see an innovative marketing story that really beats the Apple offering, yet.
Update 1: Apple executives hinted Wednesday that the company might legally contest the multitouch technology found within the Palm Pre. (Source: PC Magazine)
Update 2: Engadget reports over potential patent war between Apple and Palm.