Pilot Turns 10; Palm at Crossroads

Ten years after the birth of its flagship PDA, Palm's taking things in a new direction with its partnership with Microsoft.

In March 2005, when Mark Bercow returned to an executive position at handheld computing vendor Palm after a four-year hiatus, he found his employer was now sleeping with the enemy. The company that launched Palm OS was getting ready to launch a device based on Microsofts Windows Mobile operating system.

"You could imagine my shock and horror when I came back to find out we had this relationship with Microsoft," said Bercow, senior vice president of business development at the Sunnyvale, Calif., company. "But it was pretty clear that it was the right thing to do. Having [the Treo 700w, which launched in January,] based on the Windows Mobile platform gives us an opportunity to go after markets that werent there before."

/zimages/6/28571.gifClick here to read a review of the Treo 700w.

Yes, it has been 10 years since Palm Computing launched its first product, the Pilot 1000. The handheld pioneer has had a checkered decade of bad management decisions, botched acquisitions and increasing competition from phone companies. However, Palm officials said a new relationship with Microsoft, a focus on smart phones and a future of software partnerships have put the company back on track.

In January 1992, Jeff Hawkins and Donna Dubinsky formed Palm Computing, with the idea that the future of personal computing was mobile. Their first effort was a collaborative project with Japanese electronics maker Casio Computer. Called the Zoomer, the product was meant to compete with the Apple Newton. Like the Newton, the Zoomer flopped. After that, Palm was almost out of money when it was acquired by modem company USRobotics in 1995 for $44 million. Execs went to work on the first Palm-branded product.

In 1996, Palm Computing launched a pocket-size computer called the Pilot 1000, which was based on a simple operating system called Palm OS and a handwriting recognition program called Graffiti. The company sold more than 1 million Pilots in fewer than 18 months, and a successful handheld computing industry was born. Meanwhile, 3Com bought USRobotics.

Hawkins, Dubinsky and Ed Colligan left Palm in 1998 to form Handspring, which birthed the Treo smart phone. In 2003, Palm bought Handspring.

Palm had a rough time under 3Com-appointed CEO Carl Yankowski, who resigned in 2001. "[3Com management] almost destroyed the company, and Palm lost its leading position," said Ken Dulaney, an analyst at Gartner, in San Jose, Calif.

Palm announced in 2001 it would buy wireless middleware maker Extended Systems, but the deal fell through. Palm then bought Thin Air Apps, announcing plans to turn its server software into Palm-branded middleware for Tungsten handhelds. It nixed plans for Tungsten Mobile Information Management Server in 2003.

Palm veteran Colligan is now CEO, and officials say the future of enterprise software support lies in partnerships. By years end, Palm will offer software that lets Treo phones connect to Research In Motions BlackBerry Enterprise Server, Bercow said. While the company still sells traditional PDAs, the future lies mainly in smart phones, officials said.

/zimages/6/28571.gifRead more here about the licensing agreement between Palm and RIM.

Besides the Treo 700w, Palm plans to launch three more devices this year, including one that runs on high-speed UMTS (Universal Mobile Telecommunications System) networks, said Ken Wirt, senior vice president of worldwide marketing at Palm. The company plans to continue supporting Windows Mobile, in large part to appease international carriers. However, it also will continue to support the Palm operating system, officials said.

/zimages/6/28571.gifCheck out eWEEK.coms for the latest news, reviews and analysis on mobile and wireless computing.