Ask some of the few folks who've pulled off mobile-commerce transactions how the process went, and chances are good they'll share a sad tale. Even when you can get it to work, buying a product over a phone or a PDA is hardly easy; problems include small, low-resolution screens, spotty network support, and less-than-secure transactions. The hassles can compound each other to make the process not worth the trouble.

Handheld maker Palm Inc.'s new operating system, version 5, is designed to address many of those snags. The operating system, which shipped to manufacturers and licensees June 10, also boasts significant new features that should go some way toward encouraging businesses' wireless-commerce dreams.

Two changes to the operating system are support for "Wi-Fi" 802.11b networks and new data-encryption tools, including Secure Sockets Layer for secure Web browsing. That should encourage acceptance of mobile commerce, analysts say. Version 5 supports "a ton of additional wireless capabilities," says Sanford Bernstein analyst Paul Sagawa. "This should enable a lot of new applications."

Another big change to the Palm operating system: It runs on processors based on designs from ARM Holdings Inc., not the less common Motorola "DragonBall" chips supported by current incarnations of the operating system. That's a significant performance boost and will also make it compatible with a wider range of handhelds, Palm says.

Because version 5 also includes support for high-fidelity sound and high-density displays, the release may help bring an end to the phone industry's standard low-resolution, thumbnail-sized screens.

Microsoft's competing Pocket PC 2002 operating system already supports 802.11b and SSL, a spokesman says. Nonetheless, the new features should give business buyers incentive to purchase devices that run version 5, says Steve Sakoman, chief product officer for PalmSource, Palm's operating-system subsidiary. "The security changes are something that IT people asked for," he says. "And the performance of ARM is something that a lot of people wanted."

Devices running the new Palm operating system should appear in stores this fall. Meanwhile, other software developers are also scrambling to make their products ready for mobile commerce.

"Without a doubt, we're going in that direction," says Peter Baskin, a VP with retail-software firm Retek Inc. Its products currently lean toward customer-resource management and point-of-sale tools, but the company is experimenting with software that would let customers enter a store with their own handhelds and log on to the store's network. Once online, they could browse product information or check out and pay for their goods without the assistance of store clerks.

Baskin says those sorts of systems could appear in stores in as little as a year. He adds, "We're going to see rapid adoption very quickly."

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