PalmSource touts renamed OS versions

And claims smart phones just aren't as profitable when they use Microsoft...
Written by Tony Hallett, Contributor

And claims smart phones just aren't as profitable when they use Microsoft...

PalmSource has been explaining the renaming of its operating systems and again talking up its prospects in smart phones, a relatively new but high-growth area for the company.

Fresh from its developer conference last week and news that celebrities such as Lou Reed and Peter Gabriel have been endorsing Palm hardware, executives have been talking up Garnet and Cobalt, the Palm OSes previously known as Palm OS 5.0 and 6.0.

The idea is that different versions of the operating system suit different devices - including platforms other than traditional PDAs or smart phones - but end users, when it comes to an OS' release number, equate higher with better. The fancy brands, PalmSource claims, is the answer.

Cobalt is particularly notable as a complete re-write, incorporating some of the technology brought in when Palm acquired Be Inc in 2001, creator of the famous BeOS. Palm claims it means better security, a number of extra features and support for Java and IPv6, among other things.

But while Palm is pushing its latest technology, it is also claiming mobile operators are already better off when using its existing products. A smart phone win is expected to be announced at next week's 3GSM conference and the company admits it will target the world's 15-20 most significant operators. It sees compound annual growth rate of 70 per cent in smart phones over the next few years, so this isn't surprising.

Mobile phone makers sold about 10 million smart phones in 2003, a figure that will quadruple this year and continue steady growth through to 2008, ABI said in a report last month.

However, PalmSource claims an operator such as Orange in the UK - which offers both the Palm OS-based Treo 600 and the Microsoft Windows Mobile-based SPV as 'signature phones' - is better off with its technology.

"What the Orange ARPU [average revenue per user] figures don't show is that there are lower margins on [Microsoft] because you get more support calls," said Charlie Tritschler, PalmSource VP product marketing.

Palm has long cited research showing Palm-based PDAs having a lower total cost of ownership than Microsoft PocketPC-based handhelds - Gantry Group figures show them 41 per cent lower - but its claims for the Treo 600 are new. The result, if this is indeed the case, would be a better end user experience and juicier margins for an operator.

Microsoft was not immediately available for comment.

Orange declined to comment on the direct comparison between the Treo 600 and SPV figures, framed as average margin per user (AMPU) by PalmSource. It does, however, freely admit that these are its top two devices by ARPU. Orange says the Treo 600 delivered over €100 per month in ARPU versus around €50 for its average phone. Both are clearly popular enterprise devices but it is not clear how much purchasing is being done by individuals or IT departments.

silicon.com's Tony Hallett will be reporting throughout next week on the smart phone market and other developments in mobile from the 3GSM conference in Cannes.

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