PalmSource banks on Linux and feature phones

PalmSource, the struggling maker of the Palm handheld operating system, has said devices using Cobalt - its new OS for smart phones - are on the way. The company also intends to port Cobalt over to the new PalmSource Linux OS once it has been developed, according to the company's interim CEO Patrick McVeigh.

McVeigh said the "pipeline" for Cobalt is building nicely but he declined to elaborate further. He did note, however, that it typically takes smart phone makers roughly 18 months to develop new products.

Hong Kong-based device maker Group Sense PDA said it would ship a smart phone based on Cobalt in the US by the fourth quarter.

It remains to be seen whether the device will tempt enough carriers - device makers and cellular carriers might favour a more tried-and-tested OS for new mobile phones, such as those offered by Microsoft, RIM and Symbian.

When PalmSource executives broke off from handheld maker PalmOne in 2003 their ambitious plans for the company failed to anticipate the number of PalmSource licensees shrinking. Sony left the handheld market, and PalmOne acquired Handspring, which was number two in market share.

Their tough times have continued: PalmSource's chief executive, David Nagel, abruptly resigned on Sunday without giving a reason, and for the first time devices shipped using Microsoft's handheld OS surpassed the Palm OS for the year in 2004, according to research firm IDC.

Microsoft is also expected to increase its lead in the handheld market: this year 49 per cent of handhelds shipped worldwide will use Windows Mobile, and by 2009 that number is expected to jump to 56 per cent. PalmSource's share will shrink from 44 per cent in 2005 to 38 per cent by 2009.

Following the release of Cobalt 6.1 late last year, PalmSource announced it had acquired China MobileSoft - an acquisition designed to expand the company's global presence and put Linux applications squarely in its product plans.

While the Palm OS will run as a software layer on top of Linux, and PalmSource plans to contribute to the Linux community, the company won't release the Palm OS code to the public.

PalmSource could have a Linux-based OS available in 18 months, said Pablo A Perez-Fernandez, an equity research analyst with Stanford Financial Group.

"It would cost less to develop and give them more opportunities especially in China," Perez-Fernandez said. "However, it's a risky strategy since they don't have any licensees yet... they wouldn't see a big increase in revenues for four to six quarters."

The Linux-based OS would allow PalmSource to tap the potentially large feature phone market, which encompasses phones that are not advanced smart phones - such as the Treo 650 - but do include digital cameras and have capabilities beyond sending and receiving calls.

The OS would allow carriers to incorporate a standard operating system into feature phones, which make up a majority of the phone market. By 2008, worldwide shipments of feature phones will reach 575 million units, far bigger than the smart phone market, Perez-Fernandez said.

However plenty of development remains to be done on the Linux OS.

"There's a lot of interest," Perez-Fernandez said, adding: "but that's very different from commitment."

Richard Shim and Dawn Kawamoto write for CNET News.com