In a stunning development for mobile computing, Palm today unveiled the next generation Treo powered by Microsoft Windows Mobile OS, its longtime rival.
The Windows Mobile Treo will be available on the Verizon Wireless network in the US in the beginning of 2006.
"It's about growth and about taking this whole category to the next level," said Ed Colligan, CEO of Palm. "We think that this operating system offers some functionality that the Palm operating system doesn't necessarily have. Certainly it does some things better."
The move is the latest in a series of hurdles for Palm since it divided PalmOS software and Palm hardware into separate companies.
The software entity, PalmSource, purchased Be Inc. Software in 2001 to power the next generation of devices. But the project, codenamed Cobalt, was mired with delays as PalmSource shifted development to a Linux system.
Then came the recent surprise announcement that Japanese software developer Access, Inc. purchased PalmSource for $324M. Access outbid rivals Motorola, Palm and ultimately Nokia with an 11th hour winning bid to take control of the Palm operating system.
palmOne, the hardware manufacturer of Palm devices, purchased back the rights to the Palm name, and finalized agreements with Microsoft and Verizon for the next generation Treo powered by Microsoft.
"This is a landmark alliance that will help businesses remain on the cutting edge of competitiveness," remarked Bill Gates, Chairman and Chief Technology Architect for Microsoft. "Demand for accessing information on mobile devices is soaring, and businesses want a low-cost, scalable solution."
The Windows Mobile Treo will utilize Verizon's EV-DO high speed network with download speeds averaging 400-700 kilobits per second, which is the largest high speed network in the US.
The new Treo Windows Mobile 5.0 platform brings greater Microsoft PC compatibility, with Outlook Mobile email, Office Mobile applications, and Internet Explorer Mobile web browser built into the smartphone. Users will also be able to sync directly with Exchange Server 2003 for greater corporate compatibility.
But the transition to the Windows Mobile platform could lower demand for existing Palm devices, which recently controlled nearly 50% of the handheld market, as consumers wait for greater availability or consider other Windows Mobile devices.
"There is some cannibalization, there are people who'd want to move to this platform, no question about that, but I also think it expands the market, too." said Colligan. "I think it gets more people seeing Treos who want to use this type of functionality and that grows both markets."
Shares of Palm, Inc. traded 18% lower Friday as quarterly financial results boasted strong Treo sales but warned of significant cost increases and reduced handheld PDA sales going forward.
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