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PalmOne, Microsoft Join on Mobile E-Mail

By MAY WONG | AP Technology Writer

4:38 PM EDT, October 5, 2004

SAN JOSE, Calif. - Longtime foes palmOne Inc. and Microsoft Corp. Tuesday announced a licensing deal that will allow the next generation of palmOne's Treo smart phones to work directly with Microsoft's Exchange e-mail system.

The unprecedented relationship is designed to eliminate the need for third-party applications and servers that Treo customers previously used to access Microsoft's popular e-mail servers, the companies said. Their shared customers, most notably business users, would thus have a quicker and cheaper way to give wireless access to corporate e-mail on the handhelds, the companies said.

"PalmOne is looking for more enterprise customers, and this is a solution to make that happen," said Kevin Burden, program manager of mobile devices at market research firm IDC.

The deal will allow palmOne to better compete against Research in Motion Ltd.'s popular BlackBerry e-mail devices, which already integrates Microsoft's Exchange software and offers automatic, instant access to corporate e-mail accounts.

Treo customers can currently use e-mail software from Good Technology for a similar service. Future Treo models will have an "out-of-the-box capability" to wirelessly synchronize with Exchange data, though not necessarily with the same real-time "push" service that RIM and Good offer, analysts say.

PalmOne, the pioneer in handheld organizers formerly known as Palm Inc., has had to compete for years against the Redmond, Wash., software giant as a provider of operating systems for handhelds. Last year, Milpitas-based palmOne spun off its software division to create PalmSource Inc. The licensing deal marks one of the first signs of a less conflicted relationship with Microsoft.

PalmSource now directly competes against Microsoft's Pocket PC software, leaving palmOne, which makes the hardware, technically freer to choose new operating system partners.

PalmOne has not indicated any interest in straying from its monogamous relationship with the Palm operating system, but the latest licensing deal with Microsoft -- which palmOne president Ed Colligan said was "key" to offering a full spectrum of choices for its corporate customers -- has led to speculation.

"Maybe this is the first step these companies have to take before palmOne will look to other platforms other than PalmSource," Burden said. "You have these two companies talking, and you don't know where these talks could lead to."

PalmOne shares closed at $31.14, down $1.79, or 5.4 percent, Tuesday on the Nasdaq Stock Market.