Smartphone maker palm improved two Treo devices that run the Palm operating system by adding business-friendly features such as push e-mail for Microsoft Exchange users. But Palm faces a bigger challenge in courting and keeping business customers: convincing them that the Palm OS isn't all but dead.

Palm's adding the kind of features business users want to the Palm OS-based Treo 680 and 700p. They'll now provide automatic wireless delivery of e-mail, calendar, and contact information directly from Microsoft Exchange Server 2003 SP2 or Exchange 2007. Palm in the past provided the "push" service, the main attribute of Research In Motion's BlackBerry, only through third-party providers, and it required middleware.

The Palm update introduces another feature that's critical to IT administrators: security and central management. It includes over-the-air password policy enforcement and the ability to remotely wipe mobile devices clean of data if they're lost or stolen.

STAYING POWER?

But what businesses worry about most is whether the Palm OS will be around for the long haul.

The Palm OS is owned by Access, a mobile software company in Japan, and Access plans to introduce this year the Access Linux Platform, which will include an emulation layer for running applications based on the Palm OS. The company this week announced it's dropping the Palm name from all products, starting with the Palm OS, which will be known as Garnet OS.

Mark Spruill, an IT director at Mighty Distributing System of America, an auto-parts distributor, is concerned that apps built for the Palm OS won't run as well on the Access Linux Platform. "Emulators don't always work as well as advertised, and they almost always come with a performance price," Spruill says. He moved some of the company's salespeople to Treo 700p smartphones from the Treo 650 and started testing the Treo 680 a month ago. Spruill's concerns were relieved somewhat this month when Palm "built a little confidence that they would be supporting the [operating system] for some time."

Palm seems to believe in the Palm OS (and is continuing to use that name). Last month, the company paid $44 million to license version 5.4 of Access' Garnet in a deal that lets the device maker modify and enhance the code. Adding direct push technology and pitching Treos based on the Palm OS suggest it's not giving up. "The Palm OS is still the core of our business," says Joe Fabris, Palm's director of wireless solutions. However, Palm won't disclose its plans for the operating system, only hinting there will be "future variations."

That could be a problem. The latest version of Garnet doesn't support multitasking or third-generation cellular technology. The Palm OS is a weak No. 5 in the smartphone operating system market, accounting for less than 2% of worldwide sales in the third quarter last year, down from 4.5% a year earlier, according to research firm Canalys. "We stopped recommending the Palm OS for enterprise deployments about a year ago," says Gartner analyst Todd Kort, citing a lack of features.

Palm also sells Treo smartphones based on Microsoft's Windows Mobile platform, which had 5.6% of the smartphone operating system market in the third quarter, making it No. 3 worldwide. Palm OS's momentum is heading the wrong way. It will take more than push e-mail to turn that around with business customers.