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Sitemap Sep-Archive-05 Palm Teams With Microsoft for Smart Phone

Palm Teams With Microsoft for Smart Phone  

Palm Computing will launch a Windows-based version of its Treo phone, marking the first time Palm will sell a device based on its former rival's software.

Microsoft will achieve one of its longest-held ambitions tomorrow when its rival Palm Computing plans to announce that it will use Microsoft's Windows Mobile software in a new version of its popular cellphone organizer, the Treo.

The new Treo 700 will be offered through Verizon Wireless, according to market analyst Rob Enderle and other industry sources. In terms of the level of importance, this would be — in this space — the same thing as Apple announcing they were going to be using Intel processors, Enderle said.

Verizon Wireless, which will market the phone, will join in the announcement at an event here, according to several people involved. Emphasizing the significance of the alliance for Microsoft, Bill Gates, its chairman, will be present. Executives at the companies would not comment on the substance of the announcement.

The Microsoft-Palm alliance marks an end of an era. Palm produced the first successful hand-held computer in the mid-1990s. In 2003, when Palm Inc acquired Handspring, a company created by Palm's founders, it used the Handspring Treo to build its position in the market for cellphones with personal-organizer capabilities.

Palm has struggled to find a compelling software direction and to replace its aging and fragile Palm operating system. The Palm operating system that Treos has until now run exclusively and has limited multitasking abilities. The new device will run on Windows Mobile 5.0, the latest version of the operating system that has been challenging Palm OS for years.

Though the Palm OS dominated the industry, its lead has steadily lost ground to Microsoft's offering, which is based on that company's ubiquitous Windows desktop PC software and thus familiar to more people.

Users, especially in the corporate world, have been lured to Windows-based handhelds because they can run several programs at once and offer better support for documents created on Windows PCs and for Microsoft e-mail.

No question that Microsoft has made significant inroads compared to where they were just a couple of years ago – which was no where, said Charles Golvin, analyst for Forrester Research. Microsoft in the long term wants the kind of strong position in mobile devices that it has in PCs, Golvin said. They would like to have 90-percent market share on PDAs, smart phones or cell phones.

One feature not immediately available in the Windows software, however, will be the ability to push e-mail to users as it arrives, rather than forcing them to fetch it, according to an industry expert with detailed knowledge of the announcement. Such a feature would be necessary to make the system a direct competitor to the BlackBerry, made by Research in Motion.

Microsoft has led a long, costly and often frustrating campaign to gain an opening in the hand-held software world. Indeed, only in its next-generation mobile software, expected by the end of this year, is it reported to reach the industrial strength standards demanded by the consumer electronics industry, according to a range of industry executives.

Indeed, a key factor in the new alliance may have been Palm's ability to get a sweet deal from Microsoft, according to an industry insider with detailed knowledge of Microsoft's pricing arrangements.

Microsoft has set the price of Windows Mobile at US$13 per handset, said the executive, who spoke on condition of anonymity because he is a competitor in the hand-held computing market. But Microsoft has also discounted its software to as little as US$3 per cellphone in highly competitive situations, the executive said.

The price range makes Microsoft an expensive alternative compared to competitors like Symbian and Qualcomm's Brew, as well as Linux alternatives, according to an industry executive.

A Microsoft spokesman said the company would not comment on the pricing arrangements.

One significant question raised by the Microsoft-Palm alliance is the future of Palm software developers. In the past, Palm has pointed to the large library of programs available to users of Palm devices as an advantage over Microsoft.

Silicon Valley software developers say Palm may move its programming environment to the new Windows Mobile operating system. As Palm Source's troubles mounted, analysts began wondering when Palm Inc. might seek a more stable company to provide its operating system.

Microsoft understands the back end and Palm understands the front end and the two of them – if they can work together – they can do some incredible things, Enderle said.

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