PalmOne: Still loves PDAs, no word on other OSes

Despite seeing ever-increasing sales of its smart phones, PalmOne promises it will continue to target the market for handheld computers known as PDAs, with some observers even saying it will look beyond Palm OS.

The market for PDAs is a fraction of the size of that for mobile phones. However, even after sales of the Treo 600 smart phone have ramped up, half of PalmOne's revenue still comes from PDAs - more than that in Europe.

Speaking to silicon.com, PalmOne this week said it does see a renewed opportunity in the PDA market as content such as photos, audio and video is digitised.

In related developments, US sources have said PalmOne has been testing devices running on Microsoft operating systems and Linux - which could spell bad news for former subsidiary PalmSource, the company that provides the Palm OS and counts PalmOne as its biggest customer.

Brian Blair, an analyst at San Diego-based hedge fund Dorado Capital, reckons testing at PalmOne paves the way for a launch of a Microsoft-based Treo smart phone some time next year. The Treo 600 has been a huge success for PalmOne, counting a number of US and European mobile operators as customers, and the company recently released a more advanced version, the Treo 650.

A report out on Monday by Needham & Co analyst Charles Wolf called a Microsoft-based Treo "virtually certain".

PalmOne has done a licensing deal with Microsoft to make accessing corporate Exchange email servers easier from PalmOne devices but many users assume Microsoft-based devices are the best at integrating with Microsoft-based desktop and server software.

PalmSource and Microsoft have not commented on the possibility of Microsoft-based PalmOne PDAs or smart phones. PalmOne is on record as saying it looks at various platforms.

PalmOne will not be drawn on the extent to which it is refocusing on smart phones.

Franck Gaget, PalmOne marketing director EMEA, told silicon.com: "Obviously we have reallocated resources [towards smart phone development] and we will continue to do that. We are hiring more engineers, as well as sales and marketing people, with skills and a background in telephony."

PalmOne is now working on developing a family of smart phones, with no word of any other OS for models, whether Microsoft or Linux.

It has yet to disclose any plans for 3G models of the Treo 600 or 650, saying it is still too early for such devices.

"We are not in a test market environment," Gaget added.

Richard Shim and Ina Fried write for CNET News.com.