A new OS for palmOne: We will. We won't. But we might do both...

As previously reported, last week saw wide coverage of the rumour that palmOne may be considering to develop devices running other operating systems than PalmOS such as Windows Mobile, PocketPC phone edition and even Linux. 

These rumours continue unabated and if nothing else actually appear to be gaining steam.  The main issue that I have with these and why I decided to write about it again is that the rumours are filled with mis-information and quite frankly also with some poor analysis.

At a London analyst briefing last Wednesday Ed Colligan, President of palmOne, had this to say about the matter: "If they [PalmSource] can't support us then we will do that [select another OS or maintain their own version]."  Furthermore, as first reported by PalmInfocenter, he reiterated the fact that if palmOne were not considering other operating systems it would strongly negate one of the principal reasons for "the split" that created palmOne and PalmSource in the first place.

As a 'device' manufacturer, palmOne like other consumer electronics companies should naturally explore every conceivable option that it has available to promote the sale of its products - including other operating systems.  The argument goes that even though PalmSource and its PalmOS has provided palmOne with the best such option to date does not mean that it will continue to do so in the future.  As I have noted previously, I am a very stong believer and supporter of PalmSource's latest software developments and leaving aside the fact that its resources are already stretched thin I cannot immediately appreciate why palmOne would consider any other OS.

For its part, PalmSource has already licensed the PalmOS to other large consumer electronic manufacturers such as Samsung and it recently announced that up to a dozen new smartphones running either Garnet or Cobalt are slated for release in 2005.  I can only envisage that many more new and established manufacturers will jump on the PalmOS bandwagon as palmOne's Treo rapidly establishes itself as the leading smart phone and others seek to ride its coattails.

News.com, which first brought these rumours to the fore following a Needham & Co. analyst report, has now written two articles about this issue and in each it repeatedly attempts to convince the reader that "any move to another OS [by palmOne] would be a significant blow to PalmOS developer PalmSource".  Considering that the Needham analyst stated that "he didn't expect PalmOne to ditch the Palm OS and that Microsoft operating system support would complement the Palm OS" and furthermore that palmOne's revenues are currently 100% derived from PalmOS devices, News.com's views of the effect on PalmSource would appear to be grossly exaggerated.  Why the need to go out of their way to try to discredit PalmSource then?!?!  It really makes me wonder whose agenda we're treading on here...

Also, among others, in its second article News.com further reports that "Analysts said they believe PalmOne support for a Microsoft OS could help PalmOne sell more devices to large businesses, many of which use Microsoft software. The business market is seen as a key growth area for the most capable of mobile devices--phones and handhelds that can access information stored on a corporate network."  A very nice statement except that it means absolutely nothing!

There is no evidence at all to suggest that PalmOS devices have more limited appeal to large businesses than MS mobile devices - as a comparative example note how rapidly RIM has penetrated this market with its own completely separate solution...  Also, PalmOS devices are just as capable (if not more) as MS mobile devices to access information stored on a corporate network.  Others argue that nobody (yet) really cares about the OS on their smart phone.

So what is all of this nonsense about palmOne and Microsoft really about then?  Peter Arts, a frequent Treonauts contributing writer, has his own theory to share below.

I'm really at a loss with this one.  At the NYC Treo RoadShow last month, Ed Colligan and his people went out of their way to explain WHY the T5 and Treo650 wouldn't be running on Palm OS v6.x, and stressed their commitment to the Palm OS platform. IF...the OS story is true, then the only scenario I can envision is this:

Microsoft has put out feelers to the p1 Board about acquiring the company, and this is a tactical answer from p1 to those overtures. Let me explain my reasoning...

1) Microsoft covets the smartphone marketplace, and has not had much success, for all of their marketing and development muscle. I maintain that it is due to a fat, unstable OS wrapped in WAY TOO MUCH hardware for the corporate user to tolerate on a daily basis.

2) p1 (via Handspring) has hit on the first widely accepted form-factor. Lose the antenna, and it might be darn near perfect. With their minimal muscle, they have already taken the #2 smart phone position away from MS. On top of that, PalmSource Inc. (PSI) announces the birth of Cobalt, which looks to have traditional Palm stability, small memory impact and flexibility. To all of that, it has added anything that MS's smartphone OS can do, and is attracting new partners outside of p1.

If I'm MS...I take notice.

3) MS sees the opportunity to score a triple-whammy:

a. Deliver their smartphone platform via the most popular device
b. eliminate a suddenly resurgent rival, in p1
c. eliminate (or cripple) a much larger threat from PSI, by taking away their largest, and most visible hardware partner

Of course, I may just be talking through my hat...this is a regular habit of mine. But, I think it fits the few known facts and MS's established competitive tactics as well as any other scenario. I HOPE I'M WRONG!!!

Bottom line:

IF...this is true, then I believe it is very foolish of p1.

1) Outside of the Treo, they have no serious chops as a hardware shop, and will be marginalized by MS's more established partners, like Dell and HP.

2) IT'S THE OS, STUPID! The loyalty has never been to the Palm hardware...it's always been to that wonderful OS. If p1 aligns or sells themselves to the MS PDA/Smartphone OS, they will quickly lose their client base.

3) This could be a god-send for PSI and the rest of us:

IF...this is true, then PSI would be free of their deference to p1's management, and could really fly. If Cobalt is half of what they claim, they will have no end of smartphone/PDA designers and manufacturers climbing on-board to gain a piece of this desirable pie. Furthermore, although MS and p1 may count on existing relationships with carriers, the US Congress has finally gotten off their duffs, and are keeping a very close eye on wireless carriers. Any who would try to suppress PSI devices would have a ton of hurt on their backs.

While there is no basis on which to report that Microsoft may or may not have made certain overtures to palmOne's board, I agree with all of Peter's points except the one that he makes about the loyalty to palmOne's hardware.  I actually do believe that the hardware happens to be pretty important but it is the seamless integration and interaction between both the hardware and the software that delivers such a unique experience on the Treo.  We will have to wait a while longer to determine just how loyal users are to palmOne-specific hardware running PalmOS as opposed to other consumer electronics companies' offerings running the same OS...

In the end I believe that what all of these rumours really boil down to is a serious case of Treo-envy!

[UPDATE: Om at GigaOm on the other hand is an altogether pessimistic Treonaut...  We both agreed to disagree on this issue a little while ago...]

Treonauts finish first...

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