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Palm Targets Smart Phones

The operating system to be unveiled today can e-mail, surf the Web and instant-message.

September 28, 2004|David Colker | Times Staff Writer

PalmSource Inc. has heard the call -- and it's from smart phones.

The Sunnyvale, Calif., company, which makes software to run personal digital assistants, today will formally unveil an operating system that is designed for advanced wireless phones in addition to traditional hand-held devices.

The new operating system, dubbed Cobalt 6.1, will include an address book, calendar and other functions that helped make the original Palm devices famous. It will also be able to handle instant messaging, Web browsing and e-mail, tasks that are increasingly popular among wireless sophisticates.

"It's clear that smart phones is where the growth is, and we are going after that," said Michael Mace, PalmSource's chief competitive officer.

Analysts said the move was important for PalmSource as smart phones gained in popularity, outpacing declining sales of PDAs.

Worldwide shipments of the phones, which combine computing and communications functions, are expected to almost double from 17.6 million in 2004 to about 30 million next year, according to market research firm IDC. Meanwhile, sales of PDAs in the United States fell nearly 20% to 2.7 million in the last year, according to NPD Group.

"This is the basic feature set they have to have," said Van Baker, an analyst with research firm Gartner G2.

Smart-phone buyers are PalmSource's fastest-growing user base. Of the 1.4 million devices shipped by PalmSource licensees in its most recent quarter, 21% were smart phones, up from 7% in the same time period last year.

"They are diversifying their base," said Jamie Friedman, an analyst with Fulcrum Global Partners in New York.

But the company is also playing catch-up, said John Jackson, a Yankee Group analyst.

Mobile phone giants Nokia Corp., Motorola Inc. and Ericsson formed Symbian Ltd. in 1998 to develop operating systems for smart phones. And Microsoft Corp. has had its software in smart phones for nearly a year.

Shares of PalmSource fell 53 cents to $20.06 on Nasdaq.

Associated Press was used in compiling this report.

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