Palm drops Windows Mobile operating system

Palm is to stop making Windows Mobile devices.

Chief executive Jon Rubinstein said on the company's conference call yesterday that Palm plans to focus exclusively on its WebOS software. The new operating system is the foundation of its Pre handset and Palm's latest device, the Pixi.

The Palm Pixi (photo credit: Palm)

While the company will continue to sell the current generation of Palm Treo products that use Microsoft Windows, it will focus its research and development on WebOS. All future products will be WebOS-based, Rubinstein said.

The move is not surprising given Palm's investment in WebOS, but nonetheless it is a blow to Microsoft, which has been struggling to maintain support for its Windows Mobile operating system. Microsoft made a big deal when it first landed Palm as a licensee back in 2005. Then Palm chief executive Ed Colligan took the stage with Microsoft chairman Bill Gates in San Francisco to tout the new alliance.

Palm's smartphone sales in the fiscal first quarter of 2010 rose by about 134 per cent compared to the preceding quarter, but Palm still reported its eighth consecutive quarter of loss, and sales dipped more than 80 per cent.

The company sold 823,000 smartphones in the quarter. Many of those smartphones are believed to be the Pre, soon to be available on O2.

Palm has struggled to regain footing after losing market share over the past couple of years to companies such as Apple with its iPhone, and RIM, maker of the BlackBerry devices. The Pre has been seen as the company's last hope at getting back in the game.

The Pre faces stiff competition in the upcoming Christmas season. In addition to the iPhone 3GS, which launched in June, there are several new phones coming to market, including several Android devices such as Motorola Cliq (known as the Dext in Europe).

The device is supposed to be on sale before Christmas, and Motorola is expected to announce another Android phone in the coming weeks.

Still, Palm executives said they believe they have a strong line-up going into the Christmas season with the launch of the new Pixi, a lower-cost device than the Pre.

Original article: Palm losses mount despite the Pre from CNET News.com