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9/4/2007
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Palm Dumps Foleo Ultraportable Computer

Palm does plan a "Foleo II," but it would be based on the same platform under development for the Treo.

Palm on Tuesday killed development of the Foleo, an ultramobile, Linux-based computer, saying the company needs to focus all its resources on developing its next-generation smartphones instead.

Part of that effort includes a new Linux-based operating system that Palm plans to use across its future smartphones. The company's current Treo portfolio competes with Research In Motion's BlackBerry, the Apple iPhone, and devices from Motorola, Samsung, and Nokia.

The Foleo was meant as a large-screen companion device to the Treo. The ultraportable computer, initially priced at $500, would let users create e-mails and edit documents using a 10-inch display and a full-sized keyboard.

Palm chief executive Ed Colligan decided to dump the device when it was nearly at the point for shipping to avoid putting the company in a position where it would have to develop, market, and support two separate platforms, one for the Foleo, the other for Treo smartphones. The latter is Palm's financial bread and butter.

"Our own evaluation and early market feedback were telling us that we still have a number of improvements to make Foleo a world-class product, and we cannot afford to make those improvements on a platform that is not central to our core focus," Colligan said.

Indeed, at least one analyst said the Foleo was a bad idea from the start. "I was surprised that they canceled [the Foleo], but they never should have done it to begin with," said Jack E. Gold, analyst for J. Gold Associates.

Palm has limited resources in comparison to its larger rivals and was already behind in updating its smartphone operating system and getting it in new devices. "The truth is they should have had it out a year ago," Gold said. "They're behind the eight ball, and [competitors] are passing them by."

The Foleo got a lukewarm reception when Jeff Hawkins, inventor of the groundbreaking Palm Pilot handheld computer and the Treo, unveiled it in May at the "D" conference hosted by Wall Street Journal personal technology reviewer Walt Mossberg.

Some experts questioned whether a Treo customer would be interested in buying a second device that was very limited in functionality when compared to a Windows-based ultramobile PC that could run Office and other popular software.

Colligan said Palm would take a charge of less than $10 million to its earnings as a result of dropping the Foleo. Nevertheless, the company would have lost a lot more if the device had shipped and failed in the market. "If you're going to cut your losses, cut them as soon as possible," Gold said.

Palm does plan a "Foleo II," but it would be based on the same platform under development for the Treo, Colligan said. "We're not going to speculate now on timing for a new Foleo, we just know we need to get our core platform and smartphones done first."

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