RealTime IT News

Palm Has Designs on Microsoft Mobile

UPDATED: In a major shift in the PDA industry, Palm is expected to announce today that its Treo 700 smartphone will be powered by the Microsoft mobile operating system.

Palm President and CEO Ed Colligan, Microsoft Chairman and Chief Software Architect Bill Gates and Verizon Wireless CEO Denny Strigl are expected to make it official during a noon news conference at The Palace Hotel in San Francisco.

"[Palm and Microsoft] have obviously competed, sometimes vigorously, but things have changed," said Colligan, who noted that his company no longer develops operating systems or simple organizers.

The device will be available early next year and cost slightly more than current Treos. At first, Verizon Wireless will sell them exclusively through its retail stores and sales force. Palm will bring the new Treo to other carriers in mid-2006.

Gates said the partnership targets a high-growth market.

"Every professional will have a phone that connects up with their e-mail," Gates said. He noted that the Microsoft-powered Palm will sync with Outlook and Exchange and should provide new applications because there are so many developers working on the Windows platform.

Colligan called the collaboration "one of the worst-kept secrets" in the industry. Last week, pictures of a Treo with the familiar Windows OS on its color screen and Verizon Wireless branding on its case appeared on Engadget.com.

Treo 700
The Palm Treo 700 will run Windows Mobile.
Source: Microsoft

The companies offered few specifications of the new Treo other than to say it will be powered by Intel processors and run over Verizon's EV-DO network . Engadget said the new Treo will also feature a 1-megapixel camera, Bluetooth and 64MB of memory.

Palm may continue selling Palm OS alongside Microsoft OS Treos, which are popular with business executives because they can reduce the amount of communication devices they must carry.

Treos combine voice, e-mail, calendar and other organizational tools. Colligan, Gates and Strigl said they all plan to use the new Treo as their primary smartphone.

But market trends suggest the move to the Microsoft OS is more about fading out a slipping product than it is consumer choice.

Palm OS was once the dominant PDA OS, but its market share has steadily eroded. According to second-quarter 2005 data from Gartner, shipments of Palm OS-enabled devices now represent 19 percent of the PDA market, a dramatic fall from 42 percent in 2004.

The Palm OS has lost share to Microsoft, which held a 46 percent market share in Q2 according to Gartner, followed by RIM, whose popular BlackBerry devices have helped it take a 23 percent market share.

Corporate changes haven't helped Palm's focus, either. The company split into two separate units in October 2003: Palm focused on hardware and PalmSource on the OS.

Then, earlier this month, PalmSource was bought by Tokyo-based Access for $324 million. There was some speculation that Palm would reintegrate the unit, but a deal was never made.

The companies' announcement coincides with the kickoff of the CTIA Wireless IT and Entertainment show in San Francisco.