At Palm's Analyst Day yesterday, CEO Ed Colligan casually mentioned that Palm is developing its own Linux-based operating system for future devices. And of course, he dodged any questions about a potential sale. Does Palm finally have an Ace up its sleeve?Let's not beat around the bush here. Even though Palm is seeing a nice growth curve in overseas markets, its losing some ground in the U.S. to competitors who have sleeker, newer models that are more enterprise friendly. If Palm wants to remain a vital player in the mobile enterprise market, it needs a new success story. Soon.

Could this new hybrid Linux/Garnet operating system Colligan spoke of be the key to that success? Possibly. Colligan spared few hard details about the platform, but said it would be a new foundation for Palm. Apparently Palm has been working on the new platform quietly for years, and will use it provide better battery life, instant on, improved Web browsing, built-in Web services and applications that allow for backup and restore, as well as better device flexibility.

These improvements all sound good on paper. Palm's current OS definitely has its quirks. Perhaps placing its OS on top of a Linux core will also provide for more stable devices. Of course, these improvements will be meaningless unless Palm can house them in more appealing hardware. While the original Treo was a trend-setting device, it no longer holds the same cache.

Colligan said the OS will be seen in devices by the end of 2007, though he didn't comment if those devices will be PDAs or smartphones. Palm will continue to work with Microsoft to offer Windows Mobile-equipped devices.