The day after the iPhone 3G S was announced at Apple's Worldwide Developers' Conference, I ordered one from AT&T. The Palm Pre was released a few days earlier, and it has a number of features that I frankly prefer to the iPhone, including true multitasking, a very simple way of intelligently integrating (not just merging) contacts and managing email accounts. Most importantly, the Palm Pre has a hardware keyboard, while the iPhone's keyboard is on-screen.
The new iPhone 3G S does video, which the Palm Pre doesn't yet do, but what really clinched the deal for me was the 50,000 applications available for the iPhone, compared to the 20 or so that were available for the Pre at launch. I certainly didn't expect the Pre to have anywhere near the iPhone's application count at launch, but by severely limiting developer access to the Pre's WebOS SDK, Palm virtually guaranteed that its opening-day assortment of applications would be paltry.
The Palm Pre and WebOS are a very impressive platform, and I'm not going to speculate about how successful Palm will be long-term. However, Apple is well on its way to building the same kind of overwhelming network effects lead in the smartphone business that Microsoft has built in personal computers. No matter how good the Pre and subsequent models are, they probably won't be able to overcome Apple's lead in applications and installed base.
Palm needed to put a full-court press on developers from the day that the Pre was originally announced. Instead, it assumed that the functional superiority of the Pre/WebOS combination would overcome a lack of applications at launch. That was true for some customers, but as in the PC business, it looks like applications are driving purchase decisions.