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Ten years after Palm, Inc. released its first PDA (personal digital assistant), the Pilot 1000, the company is going strong. While the road hasn't always been easy, the Sunnyvale, California-based vendor announced better than expected earnings for last quarter; growing profits 36 percent and increasing guidance for next quarter.

While the company's bread and butter over the years has been PDAs, Treo smartphones have driven growth of late. Smartphone revenue hit $288.5 million compared to only $100 million for non-cellular-wireless handhelds, and Treos accounted for an impressive 76 percent of earnings compared to just 46 percent a year earlier.

In April 2005, Palm sold its millionth Treo. Since then, the company shipped an additional 2 million more.

Palm also benefited from its controversial decision - to Palm OS loyalists anyway - to support multiple platforms with the Windows Mobile-based Treo 700w, which it released through Verizon Wireless in January. The Treo 700w gave Palm an in with enterprises intent on standardizing across Microsoft platforms. It also helped Palm capitalize on RIM’s - recently settled - legal troubles, as companies who otherwise wouldn’t have given Palm’s smartphones a try did.

Palm says smartphones are its future. It plans to release at least three more this year, including the rumored Treo 700p (basically a Palm OS version of the Treo 700w, of which a lot is already known) at various price points to address different market segments. There's also a smartphone code-named Hollywood that could be Motorola RAZR-thin. It would nix the traditional Treo antenna, yet feature high-speed EV-DO networking support and find a home with Verizon (and maybe Sprint) sometime during the second quarter. Another rumored Palm smartphone is code-named Lowrider for the mid-range ($200) market.

Although Palm impressed with its numbers, 80 percent of its revenue – still mostly from Palm OS devices - comes out of one market, the U.S.—Symbian (and by extension Nokia and then Sony Ericsson) dominates smartphones sales throughout most the rest of the world, with Microsoft’s Windows Mobile OS and then Linux hot on that handset platform’s tail.

So in a conference call, Palm CEO Ed Colliigan re-emphasized the company's plans to expand to other markets. He said, "Europe is our next major target region...We will launch more products this year tuned to global demand."

Palm opened a Research and Development Center in Dublin, Ireland to create custom Treo applications for mobile operators in the European, Middle Eastern and African (EMEA) regions last October with that very purposes in mind. Due to the differences in global wireless-communications systems, Palm said it believed mobile solutions are best delivered with targeted R&D activities and close collaboration with European mobile operators.

History
Jeff Hawkins founded Palm Computing back in 1992, joined shortly thereafter by Donna Dubinsky, to create software for handhelds (a deal with Casio and then Compaq fell through) and then a full-fledged organizer based on concepts Hawkins had developed. U.S. Robotics acquired the startup in 1995 and released the Pilot 1000 with 128 kb of memory - tiny by today's standards - a decade ago this month. This 5.7-ounce device combined a calendar, contacts, to-do lists, notes and more.

A year later, the PalmPilot appeared, giving the lexicon the name many people still use for handhelds, followed by U.S. Robotics' acquisition by 3COM. In 18 months, Palm sold 1 million PalmPilot units, unheard of for a handheld at that time. It has sold 30 million PDAs in the last ten years.

In addition to the simplicity and small size of Palm's products compared to earlier offerings, such as Apple's failed (bulky) Newtons, the Palm OS’s open architecture and easy-to-use Graffiti handwriting recognition system sealed the deal for many customers. This allowed a thriving aftermarket third-party software business to develop.

Founders Hawkins, Dubinsky and future CEO Ed Colligan left the company in 1998 to form Handspring, and created the Visor and more importantly for the future of Palm, the Treo.

The first Palm handheld I owned appeared a year after that, in February 1999 - the sleek and still hard to beat, Palm V - followed shortly thereafter by Palm's first wireless product the Palm VII and then the company's spin off from 3Com and very successful IPO - and eventual stock crash.

Hard times followed for both Palm and Handspring, as a little known Canadian company called Research In Motion was able to capture the corporate consciousness - a nut Palm is still having trouble cracking - with its industrial strength wireless e-mail solution and ergonomic handhelds with QWERTY keyboards, for example, and Microsoft started to get aggressive with its own mobile device plans—the first truly successful example of which was Compaq's (now HP's) iPAQs.

One of the first compact smartphones soon appeared from Handspring, however, with the Treo 180g shipping in February 2002. It offered everything a Palm OS PDA did, but integrated it with a fully functional phone. While the Treo wasn't the first smartphone - Nokia's Communicator series pretty much lead the way - it could actually fit comfortably in your pocket.

Over the next couple of years, Palm maintained its place as one of the best-selling PDA vendors, but that market began to decline as smartphone sales started to grow. In October 2003, it spun off PalmSource, the developer of the Palm OS, and acquired Handspring, along with the latest Treo model, the 600, which is still available and is the basis for the current models, the Palm OS Treo 650 and new Windows Mobile Treo 700w.

Hawkins (as a consultant for new products), Dubinsky (now a part of Palm's board) and Colligan (now CEO) all rejoined the company. For about a year and half after these events, Palm changed its name to palmOne, but switched back to Palm last year.

Future
According to Hawkins, he is working on a third category of product - not PDA or smartphone - for the company. He told Business 2.0, "One of the missions we have at Palm is to design breakout products. It's hard, really hard, to do. Palm's done it twice, you could argue, with the original PalmPilot, and the Treo smartphone. We've got another one in development."

He noted that he makes test models to carry in his pocket out of foam today and not plywood like he did with the original Pilot.

In the Portland Business Journal last July, Hawkins said this about his current project, "I always think of mobile computing as personal computing. This long-term vision has led us through everything—first the organizers and now through the smart phone space. It's like everything a personal computer is. Continue down that path. What are the implications of a world where everyone has a super high-speed Internet connection in their pocket and many gigabytes of storage, super-fast processors, audio, visual and multimedia? What are the consequences of that? How will that change computing when you have all that stuff available to you all the time? I try to think into the future. That's how we come up with new products. So I'm not going to tell you what it is, but it's following the consequences of mobile computing. "

Wherever Palm's future products lay - PDA, smartphone, or mystery device - it'll have to move to a new platform at some point. Whether that means standardizing on Windows Mobile or even taking a look at Symbian or Linux is open to debate.

What isn't, is the version of the Palm OS, Garnet, used on its PDAs and current Palm-based Treos is dated. Palm OS Cobalt, Garnet’s successor, arrived, well, dead on arrival. It simply didn't offer enough incentives for device manufacturers to use.

Palm delivers a lot of enhancements to Garnet, as well as its own alterations to the native Palm OS PIM applications, but there's only so much you can do to the outside of a house before the infrastructure starts to crumble.

That's why it worries some followers of Palm that it hasn't come out strongly in support of PalmSource's (now a part of Japan's ACCESS Co.) Access Linux Platform (ALP) and MAX, the new graphic user interface and application framework for ALP. Even though ALP really isn't the next version of the Palm OS, but a successor to the successor, it should feature aspects of the Palm platform in the interface that end-users are familiar with. At least that’s the hope for some.

PalmSource’s Senior Director, Corporate Communications Maureen O'Connell recently told Computing Unplugged that "it's not particularly our intention that MAX "inherit much of the traditional look and feel of the Palm OS" - while this paradigm works fine on PDA-like devices with touch screens, it's not as effective on more "phone like" devices - MAX is intended to address both effectively."

Whether it looks, feels, smells or acts like the Palm OS everyone knows and loves or not, people still want to know whether Palm - PalmSource’s biggest licensee by a mile – will sign up for ALP. Period.

Palm simply isn't ready to commit to giving that information out yet. In fact, Palm has kept its distance from ALP, continuing to chime in with support for Palm OS Garnet, but refusing to comment on PalmSource's Linux play.

Palm extended its Palm OS licensing agreement with PalmSource through 2009 back in May 2005 for a minimum of $148.5 million. The company’s director of public relations Jim Christensen told internetnews at the time of the PalmSource’s ALP announcement, "We continue to use Palm OS 5/Garnet to power our products.” But he wouldn’t, nor has anyone from the company since, commented on Palm’s plans to adopt ALP in the future.

Here’s a possible reason why:

While an ALP SDK (software development kit) is due to ship by the end of the year, there's been no word from PalmSource about a PDK (product development kit), which is what manufacturers would need to build a device. When a device maker receives a PDK goes a long way towards determining how long it would take to develop and release a Treo, for example, based on the new OS.

Michael Mace, PalmSource's former Chief Competitive Officer points out in his blog even if Palm receives a PDK by the end of the year – when the SDK is due - it could result in a late 2007, early 2008 launch date for a new ALP-based device from Palm. Now that PalmSource is part of bigger company, it isn't such as big problem for them – they have more breathing room - but for Palm, certain features simply won’t wait that long for their smartphones. In addition, Palm may not want to hurt its current sales and momentum by tipping its hand towards products that may not come to fruition for well over a year.

While a Palm OS-based Palm smartphone, the Treo 700p, is most likely coming from Sprint (an EV-DO 3G/CDMA provider) in the near term, Mace isn't so sure Palm can pull of the feat of adapting a Palm-based Treo to operate on a UMTS 3G/GSM network, which is the type used in most of the rest of the world, for example, and by carriers like Cingular in the U.S.

So if it can't create a 3G GSM Palm smartphone or develop an ALP handset in the near future, some have speculated Palm may move over to Windows Mobile completely.

Mace doubts this will happen; although Palm's silence worries him nonetheless. "Palm may not have a choice but to put a lot more investment against Windows Mobile, since it's compatible with UMTS right now," he writes.

More resources invested in Windows Mobile means less money for ALP development. Something's going to have to give eventually.

Stay tuned.