Palm, the smartphone maker, faces a challenge because it uses an operating system with an uncertain future, and it has a limited ability to change the perception that the "Palm OS is dead."
Palm released a significant update to its Treo 680 and Treo 700p smartphones on Thursday that adds business-friendly features to the Palm OS, like Microsoft's Direct Push Technology for automatic delivery of wireless e-mail and improved security. But Palm faces a challenge. It's a hardware company that uses an operating system with an uncertain future, and it has a limited ability to change the perception that the "Palm OS is dead."
Business professionals have been reluctant to trade in their BlackBerrys for Palm OS-based Treos because they didn't come with out-of-the-box "push" E-mail, which automatically transmits e-mail messages that have been received by a server to a mobile device. The Treo 680 and 700p both have a built-in e-mail application called VersaMail that has to be scheduled to pull e-mail out of a server every few minutes.
With the latest update, Treo users get automatic wireless delivery of e-mail, calendar, and contact information. The service doesn't require middleware since it can directly access Microsoft Exchange Servers, but IT organizations need to have deployed Exchange Server 2003 SP2 or Exchange 2007.
The 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.
In October, Palm rolled out the Treo 680, its latest GSM quad-band smartphone running the Palm OS. The smartphone caters to consumers with multimedia features for shooting video, creating photo slideshows, and recording personal ring tones. Now Palm hopes to also attract a business crowd.
Access, a mobile software company in Japan that acquired PalmSource, the maker of the Palm OS, plans to introduce in the first half of this year its Access Linux Platform, which will include an emulation layer for running Palm OS-based applications. The company this week announced it's renaming all products that originally had Palm-based names. The first product to be renamed is Palm OS, which will be known as Garnet OS.
Some business Treo users have a tough time buying into the new approach. Mark Spruill, an IT director at Mighty Distributing System of America, a company that sources auto parts from manufacturers and delivers them to technicians, is concerned about backwards compatibility between the Access Linux Platform and Palm OS apps. "Emulators don't always work as well as advertised, and they almost always come with a performance price," Spruill says. Some of the company's salespeople were transitioned to Treo 700p smartphones from Treo 650, and the company started testing Treo 680 a month ago. Spruill's concerns were somewhat relieved this month when Palm "built a little confidence that they would be supporting the [Palm OS] for some time."
Palm has made no commitment to the Access Linux Platform, although last month it paid $44 million to license version 5.4 of the Palm OS, also known as Garnet, from Access. The deal gives Palm access to the code and the rights to modify and enhance the software. However, Palm won't disclose its strategic plans for the Palm OS, only hinting there will be "future variations."
The addition of direct push technology and introduction of Palm OS-based Treos in recent months is a sign that Palm is not giving up. "We're like Mark Twain saying the announcement of our death is premature. The Palm OS is still the core of our business," says Joe Fabris, Palm's director of wireless solutions.
But Palm's challenge remains: to innovate an outdated platform that it doesn't own. The latest version of Garnet doesn't support multitasking or third-generation cellular technology. And the Palm OS has fallen to No. 5 in the smartphone operating system market, accounting for only 2% of worldwide sales in the third quarter of 2006, compared with 4.5% during the same quarter a year earlier, according to research firm Canalys. "We stopped recommending the Palm OS for enterprise deployments about a year ago; it's fine for consumer apps or lightweight corporate apps, but it's lacking a lot of the features that most corporate users would want," says Todd Kort, an analyst at Gartner.
Palm tried to gain back some of its market share by rolling out Treo smartphones based on Microsoft's Windows Mobile platform. Windows Mobile accounted for 5.6% in the smartphone operating system market in the third quarter of 2006, rising to the No. 3 spot worldwide. However, the Palm OS still constitutes the bulk of Palm's sales. "Palm doesn't disclose these numbers but I'm guessing that less than 35% of all Treos being purchased these days are Windows Mobile," Kort says. That's because many dedicated Treo users are not ready to hand in their Palm OS smartphones just yet. Palm needs to instill confidence in these users so they don't have to.
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