Palm Inc. launches new operating system for handheld market

SANTA CLARA, Calif. -- A year ago, investors were losing faith in Palm Inc. The once high-flying company itself admitted to frailty and mistakes.

But Palm never gave up, and launches today a new operating system -- a crucial weapon in its battle to remain dominant in the competitive handheld market.

Palm OS 5, analysts say, is a much-needed major upgrade from the pioneer of personal digital assistants' earlier operating systems.

"Those were escalator steps. OS 5 is like raising the escalator another whole floor," said Richard Doherty, director of research for The Envisioneering Group, which tracks technology developments for investors.

The big leap is that OS 5 runs on more powerful ARM microprocessors, which rival what is used by Microsoft Pocket PC devices.

The OS 5 platform is designed to be faster and more secure, and can accommodate richer audio and graphics. Multimedia users will be able to play back and record digital audio.

The new OS also expands built-in support for wireless networking -- considered the future direction of all mobile computer devices -- and should help improve connection speeds.

'Just the beginning'

Palm claims OS 5 adds performance without using more battery power, or raising prices much. The next generation of Palm devices should begin appearing in stores this summer.

"This is just the beginning of a very aggressive roadmap -- a new era of innovation for the platform," said Dave Nagel, chief executive of PalmSource, the operating system subsidiary Palm plans to spin off by year's end. "Now we could do things that would have been impossible or a lousy user experience before."

Financially, the new operating system could boost Palm's revenue by broadening its base of licensees and inviting more compelling software applications that in turn could attract new consumers.

Palm suffered major setbacks last year from the economic downtown and its own operational missteps. Its stock price has tumbled 80 percent from a year ago. The company is pushing to return to profitability this year, and predicts a rebound in sales this fall, Needham & Company Inc. analyst Charles Wolf said in a recent report.

Cutting Edge Software Inc., maker of the first spreadsheet program for Palm OS devices, has anxiously waited for the more robust platform, which can run existing applications up to 20 times faster.

For instance, pie charts that typically took 20 seconds to complete are done in a second or two on OS 5, said Mike Compeau, Cutting Edge's vice president of business development and product planning.

More importantly, he said, Cutting Edge -- and, Palm hopes, other developers -- will now look to create more advanced handheld applications.

Cutting Edge's first product designed to take advantage of OS 5 will allow two users of wireless-enabled PDAs to view and work on the same document at the same time. As long as they are connected to the same server via the Internet, "changes will be captured in real time," Compeau said.