Sun, Sep 25, 2005 - Page 11 News List

Palm teams up with Microsoft on smart phone

POPULAR ORGANIZERPalm 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.

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 Friday on the substance of the announcement.

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.

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.

At different times the company has shifted strategies, acquiring the Be operating system, experimenting with Linux alternatives and even contracting with Steve Capps, an Apple and Microsoft programming wizard, to develop software technology.

None of those efforts were successfully commercialized, and in the end Palm's chief executive, Ed Colligan, apparently decided that it was more expedient to join Microsoft than fight on as an alternative.

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.

"At the end of the day, Ed Colligan made the call that he would be getting more value out of Windows Mobile than the Palm OS," said Greg Galanos, a Silicon Valley venture capitalist who is a board member of Danger Inc, a Palm competitor.

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 that he not be identified 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.

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