2nd UPDATE: ALL THINGS D: Palm Shows Off New Pre Features

Palm Inc. (PALM) unveiled some new features for its Pre smartphone on Thursday, including one that could draw the ire of its rival Apple Inc. (AAPL).

The most significant of the new wrinkles is a media manager that can download music directly from Apple's iTunes online music and video bazaar, Palm executives said. Another newly disclosed feature is an Internet-based store, like Apple's iPhone App Store, that will distribute software for the Pre.

Palm Executive Chairman Jon Rubinstein said he "wasn't worried" about any potential repercussions from Apple, which has been known to retaliate against moves like this in the past.

Roger McNamee, co-founder of Elevation Partners, which is a significant Palm investor, added, "We're confirming (Apple's) dominance. I find it hard to believe they will get bent out of shape."

An Apple spokesman had no immediate comment.

Also Thursday, Palm's Rubinstein said that like a growing number of other smartphone software makers, including Google Inc. (GOOG), Palm also has designs on using its Pre operating system software as the basis for larger devices.

"We have designed it to work across variety of products," Rubinstein said.

Palm executives were speaking at the All Things Digital conference in Carlsbad, Calif. The conference is sponsored by the All Things Digital Web site, owned by Dow Jones, publisher of this newswire and a unit of News Corp. (NWSA).

Also Thursday, Verizon Wireless Chief Executive Lowell McAdam said the company intends to sell the Pre in about six months. The comments suggest that Sprint Nextel Corp.'s (S) exclusive deal to sell the Pre was only for about six months.

Rubinstein had no comment on the prospects of Verizon selling the phone.

Sprint and Palm will begin selling their heavily anticipated Pre smart phone on June 6 as both companies look for a hit device to reverse customer defections.

The touch-screen model was introduced by Palm to great fanfare in January. Billed as a competitor to Apple iPhone and the latest BlackBerrys, the Pre will cost $199 after a $100 mail-in rebate with a two-year Sprint contract.

Sprint, which has lost more than six million subscribers in the last six quarters, hopes the Pre will act as a strong retention tool for its wireless customers. Palm, of Sunnyvale, Calif., is hoping the device's new webOS software will help it regain market share.

The Pre, which has a slide-out keyboard, includes features new to mobile devices such as the ability to open several screens or programs simultaneously. It will initially work only on Sprint's network.

But the Pre faces stiff competition. Some analysts say Apple's next iPhone could surface as soon as a June 8 event the company is hosting for developers.

Palm shares closed Thursday up 93 cents, or 8.8%, to $11.46 and are unchanged in recent late trading.

-By Ben Charny and Roger Cheng, Dow Jones Newswires; 415-765-8230; [e-mail]