“Our channel checks suggest sales of the Pre have indeed slowed. Store traffic at Sprint stores has declined since mid-June,” Harris wrote. “The Pre, which initially was not available for online purchase from Sprint’s website, became available last week. We believe a majority of the Pre sales have been made either to existing Palm users or Sprint subscribers. It also appears not to have been as successful as the iPhone in terms of winning subscribers from other carriers.”

Harris notes that even Sprint (S) CEO Dan Hesse seems uncertain of the device’s true impact in the market. Speaking at Fortune’s Brainstorm: Tech conference in Pasadena, Calif., last week, Hesse said of the Pre: “You won’t know if we have a real hit on our hands until its been out three months, four months, five months….It’s too early to tell….We’re just getting it rolled out in decent quantities for direct distribution.”

An interesting admission. That said, the Pre did set record first-day and weekend sales for Sprint, And according to the channel checks of some other analysts, sales are not slowing. Fact is, we won’t know for sure until Palm (PALM) and Sprint go on record with real sales metrics–as Sprint may do later this week when it reports earnings.

One last point worth noting here: CL King’s note arrives amid widespread reports this morning of a Best Buy promotion that cut the Pre’s price to $99 with a two-year contract. Though the retailer dismissed the cut as an “unintentional pricing error” and promptly withdrew it, a number of Pres appear to have been sold at that price across the country.

Odd that such an accident would occur nationwide complete with in-store pricing sheets, isn’t it? Makes you wonder if someone jumped the gun on a forthcoming promotion and if we’ll see the Pre at $99 before the end of summer. And if we do, at what price will the Eos/Pixie–the Pre’s rumored little brother–be sold? $49.99?

In a research note issued Monday, Jesup and Lamont analyst Kevin Dede says as much, arguing that the company’s shares are overvalued, particularly in light of Pre returns.

“We stood just as the Street now stands, completely enamored with Palm’s highly innovative new device; however, our checks now lead us to believe that while initial sales could almost be categorized as ‘gangbusters’ and perhaps above initial assumptions, we think there are engineering complications that are driving a higher level of returned devices than otherwise expected.

“From a hardware perspective,” Dede continues, “the Pre includes the features expected in a cutting-edge smartphone, including a large touch screen, one of the most powerful processors designed for a handset, and a slide-out keyboard; we understand that a great many returns are on account of an unsatisfactory experience with the keyboard operation and dead pixels in the screen. Fixing these issues shouldn’t pose a problem, but we think the timing risk and severity should be reflected in the shares.”

Dede notes that his impromptu survey of local retail outlets–Sprint (S), Best Buy (BBY) and Radio Shack–revealed that about one in three devices is being returned. He cites, as well, a survey on Pre Central that suggests roughly 40 percent of initial Pre sales are exchanged.

Now, to be fair, this is anecdotal evidence at best. The Pre Central survey, which at present has only 615 respondents, is hardly statistically relevant. That said, Pre Central is a top Pre fan site, and Palm’s own forum has quite a few complaints, as does SprintUsers. So clearly, something’s going on here.

Reached for comment on the issue, Palm had this to say: “We think the Palm Pre is the best product we’ve ever shipped. While we haven’t seen anything out of the ordinary we will continue to closely monitor both Palm and Sprint customer service channels.”

Despite concerns about the Pre’s build quality and Dede’s contention that the company’s stock is overvalued, the analyst sees good things ahead for Palm. “In light of the overwhelming evidence supporting continued growth of converged devices, we believe Palm addresses the most enchanting segment of the mobile device market and should experience at least market growth over the longer term.

“Shorter term is obviously more interesting, and we believe Palm’s technology positions it to gain share at the expense of those companies offering less attractive, less functional devices,” Dede adds, concluding, “The competitive technology race boils down to ease of use across an increasingly complex technical environment.”

UPDATE: Concerned that its survey has been taken out of context, Pre Central is running another poll on Pre build quality, this one on its blog, rather than its forums. And while it’s no more statistically relevant than the original, it’s worth noting. Because with more than twice the number of respondents, it shows just 18 percent of initial Pre sales being exchanged.

“You know the beautiful thing: June 29, 2009, is the two-year anniversary of the first shipment of the iPhone. Not one of those people will still be using an iPhone a month later.”

– Palm investor Roger McNamee

Palm (PALM) seems to have satiated pent-up early demand for its new Pre smartphone, constrained supplies be damned. In a pair of investor notes issued today, analysts at Pali Research and JP Morgan say that sales of the Pre have tapered off to a point where supply and demand are roughly in parity.

“We have concluded our 3rd round of channel checks for the Pre,” writes JP Morgan analyst Paul Coster, who notes that demand for the handset is hovering at about 40,000 per week. “The gap between supply and demand has closed at Sprint and BestBuy stores, waitlists are eliminated or down, and most stores now have Pre devices in stock.”

Pali Research analyst Walter Piecyk also surveyed the Pre landscape and reached a similar conclusion, though he sees the slowing of sales as a bit more pronounced. “We believe that Palm Pre sales have slowed over the past week for Sprint to under 40,000 from 50,000-60,000 last week,” he writes. “…We suspect that if sales continue to moderate, Sprint would increase its marketing budget for the product. The marketing budget behind the product has been somewhat limited to date compared to the marketing push that Apple does.”

Indeed. And let’s not forget that Apple (AAPL) has a new handset on the market that’s been selling quite well. Makes you wonder if this ebb in demand for the Pre is somehow related.

Guess it’s looking like Palm investor Roger McNamee’s hyperbolic predictions about iPhone-to-Pre conversion aren’t going to quite pan out.

Interesting. Certainly puts Palm’s claim that “Sprint tells us they have never seen higher demand for a smartphone” in perspective.

Coster’s suggestion for folks intent on buying a Pre but frustrated by the meager supply at Sprint Stores and Best Buy: Try Radio Shack, which “seems to have been neglected by eager early adopters.”

The Palm (PALM) Pre officially went on sale this morning, and judging from initial reports–and my experience at a local Northern California Sprint store–neither demand or supply was particularly overwhelming. Certainly, lines for the device were far shorter than those that extended from Apple (AAPL) stores for the launches of the iPhone and the iPhone 3G.

Arriving outside my local Sprint (S) store about an hour after they first opened, I found not a queue of eager Pre-buyers, but two kids making forts out of a few Pre shipping boxes left outside the store. Inside the store, I found a group of nine people waiting in line to add their names to a waiting list for the device, which was already sold out at this location. A Sprint rep refused to tell me how many Pres had been sold this morning, but admitted that the shipment had been a small one.

The situation is apparently the same across the country. The Boston Globe reports that Sprint’s Back Bay store sold out of its 55 Pres by 11 AM. An informal survey by 24/7 Wall Street reveals sell outs or fast-dwindling supplies of the device at Sprint and Best Buy stores in Chicago, Houston, San Francisco and Los Angeles. Four of the five Best Buy stores I contacted reported selling out of the Pre very quickly; one representative told me his store had just four of the devices and he believed that to be the case at many other locations.

Sprint stores I spoke with in LA, Chicago and Boston told me they’d sold out by late morning.

Q: How many names on the list? A: “We’re not allowed to say.” A reader tells me that the line outside the W. Division Street in Chicago was at least 50 people long, and that the store started wait-listing people somewhere around #36. Another reader reports a line of about 20 people outside an Emeryville, CA Sprint store. That same reader claims a clerk told him the store had 60 Pres on hand. Still another reader reports that the line outside Sprint’s Market Street store in San Francisco started at 6 AM this morning. There were a dozen or so folks in line by about 7:30 AM. Finally, another reader reports that a Sprint store in San Francisco’s Castro district had a line of about 40 people when she showed up to get in line at 7 AM. That location, too, sold out quickly.

Four phones at the local Best Buy? Stores in Marin, LA and Chicago sold out within hours? Makes you wonder if Palm and Sprint are purposely constraining supply to foster an image of overwhelming demand.

“We believe Wal-Mart is actively pitching Apple to carry more products,” Reitzes said in a research note this morning. “With Wal-Mart improving its retail displays, we believe that the mega-retailer could eventually earn the right to sell select Mac products without diluting Apple’s brand….Apple is very particular and exclusive with who sells its Macs and any ‘Mac experiment’ with Wal-Mart would likely start very gradually via a pilot program at first–just like Mac sales started at Best Buy….While we don’t expect an immediate impact this year and believe Apple would need to reposition its line-up first, we believe that closer ties to Wal-Mart makes sense.”

Indeed, Wal-Mart (WMT) could certainly bolster Apple’s (AAPL) distribution, particularly in areas without Apple Stores. A compelling proposition: broader access to the mass-market consumer without the infrastructure costs of a standalone boutique. And surely Apple has overcome its aversion to Wal-Mart now that the big-box retailer has been peddling its iPhones for so long.

Later today, Perlman–former principal scientist at Apple (AAPL) and the founder of WebTV–will officially unveil OnLive, the online service with which he hopes to upend the $46 billion world-wide videogame market. Seven years in the making, OnLive promises to create an on-demand gaming experience that rivals those offered by dedicated videogame consoles. It’s capable of streaming even the most advanced, CPU-intensive games to television and computer–Macintosh or PC–without lag or a reduction in quality. “We’re providing you with the latest high-end titles, the exact same ones you would see at Target or Best Buy, in the same release windows,” Perlman told USA Today. “But what is really cool is you don’t need any high-end hardware to play them. There’s no physical media. It’s an all-digital platform. You never need to upgrade your equipment at home.”

A compelling proposition. A potentially disruptive one too, if OnLive is able to deliver it with the reliability and ease of use it promises. Said IDC analyst Billy Pidgeon, “It’s a good idea and has potential, but the thing I need reassurance on is being able to deliver this over the network. In games there’s no wiggle room–when you press a button to fire you want to fire,” he said. “But if it works, this could be a disruptive.”