Palm's Windows Treo to arrive in early 2006

As expected, Palm Inc. unveiled a forthcoming Treo smart phone running Microsoft Corp.'s Windows Mobile 5.0 at a press conference in San Francisco Monday. The device will be available in the U.S. early next year.

Few specific details about the device were released, but Palm President and Chief Executive Officer Ed Colligan called the Windows Treo a "historic" product that the company hopes will help it become a supplier to IT departments around the world. The Treos combine the functionality of a PDA (personal digital assistant) with the ability to make phone calls and browse the Internet.

Colligan was joined on stage by Microsoft Chairman and Chief Software Architect Bill Gates and Verizon Wireless Inc. President and Chief Executive Officer Denny Strigl, whose company will be the exclusive provider of the Windows Treo for several months.

"This is our first 3G product," Colligan said. Verizon's growing EV-DO (Evolution-Data Only) network based on CDMA (Code Division Multiple Access) technology allows download speeds between 400K bps (bits per second) and 700K bps in some parts of the U.S.

Verizon provided much of the impetus for the deal, said Joe Fabris, director of wireless and business marketing at Palm, in an interview after the press conference. Palm and Microsoft had talked about working together for a while, but Verizon's interest in a Windows Treo for its EV-DO network persuaded the companies to put their heads together, he said.

The companies have been working on the product for several years, Colligan said, but word of the device had trickled out on handheld enthusiast Web sites like Engadget (http://www.engadget.com) over the last few months.

Palm's Treo 600 and 650 have been hot sellers, but most of them have been bought by individuals for personal use. The devices run the venerable Palm OS, which has been the exclusive operating system for Palm's devices since the company's inception.

However, Windows Mobile 5.0 allows users to hook their Treos into their corporate Exchange e-mail servers and deploy corporate applications written for Windows on the phone, Colligan said.

Microsoft believes that eventually all professionals will have a phone that allows them to access their e-mail, Gates said. This device will allow Microsoft to tap into the growing demand for Palm's devices, he said.

Microsoft and Palm also worked together to build some of Palm's application expertise into the Windows Treo, allowing Palm to differentiate the Treo from other Windows Mobile 5.0 products sold by companies such as Hewlett-Packard Co., Colligan said.

Colligan did not directly address the future of the Palm OS within Palm's smart phones and PDAs in Monday's press conference. He called the Microsoft announcement an "expansion" of Palm's product line, saying "this is not about other things going away. This is about growth."

Afterward, Fabris declined to comment on the possibility of Windows Mobile-based Zire and Tungsten PDAs, but Allen Bush, director of business marketing for Palm, said Palm will continue to release updated versions of Palm OS-based Treos.

Some corporations have already deployed the Palm OS Treo 600 and 650 devices within their enterprises, and they might want to continue along that path, Bush said. Other companies that are more interested in having Windows across all their devices or have strict data security requirements might prefer the Windows Treos, he said.

"We plan to have products on both platforms for a long time to come," Bush said.

In interviews after the press conference, Palm executives did not expand on the hardware makeup of the device. It is about the same size as the Treo 650, with a QWERTY keyboard and green and red "Send" and "End" buttons for making phone calls. It will feature a SD (Secure Digital) slot, and come with one of Intel Corp.'s Bulverde processors, Bush said. Intel's mobility chief, Sean Maloney, is expected to talk more about Intel's participation in the device during a keynote address Tuesday at the 2005 CTIA Wireless IT and Entertainment conference.

The Windows Treo will not come with a Wi-Fi chip, disappointing some analysts. Colligan said that users will be able to connect to Wi-Fi networks with an SD card, but those cards take up space that could otherwise be used for storage and sap battery life, said Gerry Purdy, principal analyst with MobileTrax LLC.

The lack of Wi-Fi access could dissuade some corporate customers, said David Linsalata, an analyst with IDC. However, most users will probably check their e-mail or browse the Internet on these phones, rather than working with demanding mobile applications that require more bandwidth, he said.

Verizon has also stepped up its promotion of its EV-DO network of late, signing several deals with notebook manufacturers last week and launching an ad campaign in the U.S. with negative messages about Wi-Fi connections. Verizon has not invested as much in Wi-Fi networks as other wireless carriers, like T-Mobile USA Inc., and would prefer to keep its corporate customers away from Wi-Fi and on EV-DO, Linsalata said.

Palm plans to bring the Windows Treo to other wireless carriers in the second half of 2006, Colligan said. This will include GSM/GPRS (Global System for Mobile Communication/General Packet Radio Service) carriers in Europe and Asia, Fabris said.

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