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Microsoft And Palm Officially Launch New Treo

Microsoft Corp. and Palm Inc. took the wraps off of a long-expected partnership Monday to develop a new so-called smart phone aimed at challenging the dominance of Research In Motion in the corporate-communications market. Microsoft Chairman Bill Gates and Palm Chief Executive Ed Colligan discussed the new Treo smart phone at an event in San Francisco. The device will combine a mobile phone with other handheld functions, including email and Web access, as well as common applications like word processing and data spreadsheets.

Verizon Wireless initially will have an exclusive deal to sell the new Treo and provide wireless-network service after the device becomes available in early 2006.

No price was given for the device, which is now being called the Treo Smartphone on Windows Mobile.

Gates said the new Treo would enter “a high-growth market” for mobile customers that want to be able to have access to the same applications they have on their desktop computers and with their current mobile phones. “I think there will be a lot of Windows Mobile users that will want to switch [to the new phone],” he added.

Palm’s Colligan expects the partnership to give his company greater access to the corporate market, where Microsoft has gained strength in recent years.

“I do believe we will reach new customers,” Colligan said. “This is about growth and new functionalities that we believe the Palm OS doesn’t have.”

Palm and Microsoft competed directly for years in the handheld market, but Palm spun out its PalmSource operating-systems business in late 2003, and has since focused on Palm hardware devices. The weakening position of the Palm OS in the market was further seen when PalmSource recently agreed to be acquired for $324 million.

After the deal’s announcement, Palm shares rose 40 cents to $29.10, while Microsoft added 11 cents to trade at $25.38.

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