With the holiday shopping season round the corner, retailers like Amazon and Wal-Mart have slashed the price of the newest Palm smartphone, the last-week released Pixi, by 75 percent - and are selling it for $24.99! However, the offer entails a two-year contract with the Pixi carrier, Sprint, which sells the Pixi for $99.

Furthermore, both Amazon and Wal-Mart have also announced a reduction in the price the Palm Pre. While Amazon is selling the device for $79, Wal-Mart has priced it at $99. These offers too necessitate a two-year contract from Sprint, which sells the Pre for $149.

With regard to the announced price cuts by Amazon and Wal-Mart, most analysts opine that such a move can create a false sense about the exact cost of the devices - the list price of the Pre and Pixi respectively being $550 and $400 - thereby affecting Palm's pricing strategy.

Commenting on the price-reduction of both the Palm smartphones, Phil Cusick - Macquarie Capital's technology analyst - said: "In the long term, Palm runs the risk of ruining the price potential once Amazon and Wal-Mart are done with it."

Further, in the opinion of the analysts, though a $25 price point for the Pixi is undoubtedly attractive, it also lowers a buyer's perception of the device - and, since most buyers assume a $25 phone to be a low-end, incapable handset, the price-cut of Pixi sends out a wrong message!