Update: Windows-based Treo could be coming on Monday

Palm likes Microsoft's ability to link Windows Mobile to its enterprise software

Palm, Microsoft, and Verizon plan to hold a press conference Monday in San Francisco, which will probably be the stage for the introduction of a Windows-based Treo smart phone that has been rumored on enthusiast Web sites for weeks.

The three companies did not offer any details about the subject of the press conference in a press release Friday. However, the companies are bringing their top executives to The Palace Hotel in San Francisco on Monday. Palm President and Chief Executive Officer Ed Colligan will be joined by Microsoft Chairman and Chief Software Architect Bill Gates and Denny Strigl, Verizon's president and chief executive officer, at the press conference, the companies said.

Ever since Palm separated from PalmSource Inc., the company that develops the Palm OS, analysts and enthusiasts have been speculating that Palm would eventually turn to a different operating system vendor for its smart phones and personal digital assistants. That speculation reached fever pitch earlier this week, when Engadget (http://www.engadget.com) posted photos of the unannounced Treo 700w running the Windows Mobile operating system.

Palm, which virtually invented the handheld computing market, has been linked to the Palm OS since its inception. But Microsoft has made steady progress with its mobile operating system, and handheld vendors actually shipped more Windows Mobile-powered devices during the last quarter than Palm OS-based devices, according to Gartner Inc.

Microsoft's ability to link Windows Mobile to its enterprise software, such as Exchange, makes perfect sense for Palm, which has been trying to break into the corporate market for a long time, said Sam Bhavnani, senior analyst with Current Analysis in San Diego.

The Treo, a PDA which can also make voice calls, is one of the hottest selling mobile devices on the market, Bhavnani said. But with the support of Microsoft, IT managers might find it easier to issue the devices to their mobile workers, since they can take advantage of their familiarity with Microsoft's products, he said.

The Palm OS had been facing an uncertain future, with the purchase of PalmSource in June by Access Co. Ltd., a Japanese mobile Web browser company. PalmSource had said it was planning to turn to Linux as the base for future versions of the operating system.

Palm and PalmSource had hoped to use Cobalt, the code name for a smart phone version of Palm OS, in an upcoming Treo, but it never came to pass, said Todd Kort, principal analyst with Gartner. Palm choose to use Garnet, an older version of the Palm OS, in the Treo 650, and was forced to do a significant amount of software development on its own to make Garnet suitable for a phone, he said.

The Treos have enjoyed a good run in recent months, but Motorola has signaled its intentions to challenge Palm with the Motorola Q, a Treo-like device that will run Windows Mobile 5.0 when it is released early next year.

"If Palm didn't make a deal with Microsoft, it would face a challenge from that device," said Brad Akyuz, an analyst with Current Analysis.

The other major operating system choice on the mobile smart phone landscape is made by Symbian Ltd., which is partly owned by phone giant Nokia Corp. The Symbian OS is the world's leading smart phone OS, and is very popular in Europe and Japan, where mobile phone data networks are much more advanced than in the U.S.

A Palm spokeswoman did not immediately return a call seeking comment. A Microsoft spokeswoman was unavailable for comment.

One of the premier events on the mobile phone industry's calendar, the CTIA Wireless IT and Entertainment 2005 show, kicks off Tuesday in San Francisco.

Copyright © 2005 IDG Communications, Inc.

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