LG signs on with Palm OS

Mobile phone manufacturer LG Electronics Inc. has agreed to use a version of the Palm OS designed by Palmsource Inc. in a future smart phone, which might be the first phone to use a Linux-based version of Palm OS that is under development.

The companies did not reveal many details about their partnership in a press release Wednesday. A Palmsource spokeswoman referred inquires about the forthcoming phone to LG representatives based in South Korea, who were not immediately available for comment. But the announcement is a boost for beleaguered Palmsource, which has struggled to evolve from developing products for personal digital assistants (PDAs) to creating operating systems for mobile phones.

Palmsource interim Chief Executive Officer Patrick McVeigh had referred to a pending announcement of a new licensee last week during a conference call about Palmsource's fourth-quarter earnings results, in which the Sunnyvale, California, company swung to a profit based on a one-time gain. Wednesday's announcement solves that mystery, but does not address which version of Palm OS will appear in the phone.

The entire handheld device industry is going through a transition as the growth of traditional unconnected PDAs has stagnated. PDA companies such as Palmsource's former corporate sibling PalmOne Inc. and Hewlett-Packard Co. are spending more time building devices that pair the capabilities of a PDA with mobile phones. Some of these devices are called smart phones, while others are labeled wireless PDAs, depending on whether the phone capabilities or PDA capabilities are emphasized.

Palmsource's recent troubles stem from its inability to get Cobalt, a version of Palm OS designed for phones, into a popular smart phone or voice-capable PDA, said Todd Kort, principal analyst with Gartner Inc.'s Dataquest unit. Smart phone vendors such as Samsung Electronics Co. Ltd. and Kyocera Wireless Corp. have licensed Cobalt, but those vendors have not released products based on the operating system.

PalmOne's Treo 600 and 650, which have done very well in the market, use a modified version of Garnet, an older Palm OS version, Kort said. PalmOne created additional code on top of the Palm OS to make Garnet much more suitable for mobile phones, code that it has not shared with Palmsource, he said.

"There's probably 80 percent that is Palmsource stuff, but the last 20 percent, the phone stuff, are things that PalmOne had to do on their own," Kort said.

Last year, Palmsource announced plans to implement code from Cobalt on top of the Linux kernel. It believed that using the Linux kernel would reduce development costs and result in less-expensive smart phones for emerging markets in countries like China, former Palmsource Chief Executive Officer David Nagel said in an interview with IDG News Service earlier this year.

Now the company is planning to focus all of its development efforts on its Linux-based Palm OS release, McVeigh said during last week's conference call. This will likely be the operating system used in LG's phone, Kort said.

McVeigh said that the Linux-based version of Palm OS will be ready next year. A typical mobile phone development cycle tends to run between 12 and 18 months, the Palmsource spokeswoman said.

LG has steadily climbed the ranks of the world's mobile phone vendors, ending up in fifth place ranked by unit shipments in 2004, according to Gartner. The Seoul company has done well in North America and Korea, where CDMA (Code Division Multiple Access) networks are used more widely than in Europe, Kort said. It has also come out with several interesting clamshell or flip phones, which has been a fashionable design over the past year, he said.

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