Smartphones are the next big thing in handheld devices. That is well known. With Microsoft and Symbian set to dominate this emerging market, where does that leave the Palm platform?

Palm is still tops in PDAs with palmOne the number two mobile device manufacturer behind Nokia and its Symbian smartphones. Hewlett-Packard and its Pocket PCs is number two in PDAs. Canalys reported last month, however, that when you add the market for smartphones into the picture, Palm (22.5 percent) drops to third place behind Symbian (63 percent) and Microsoft (23 percent) as a mobile device platform. True, the Treo 600 is the most popular smartphone in the United States. Nearly everywhere else, however, Symbian dominates in smartphones with Microsoft coming up a distant second.

The Future
If a recent report by ABI Research is correct, the battle between Symbian and Microsoft should further limit Palm's viability in the platform wars for the foreseeable future. The research firm predicts that Symbian's share of the worldwide mobile phone operating system market will be at or around 50 percent by 2009, with most of the rest of the market being seized by Microsoft. That's at a time when most pundits agree nearly all mobile phones will be smartphones. But Unlike today's smartphone market, a lot more will be at stake.

In today's market, PDAs and smartphones sell in tens of millions of units, while mobile phones sell in the hundreds of millions with over 1.5 billion already in circulation. And with those numbers expected to increase in the coming years, that's a lot of ears and quite a bit of cash for today's smartphone provides to target.

ABI Research said Symbian's share should slip after an initial rise above 50 percent because of its focus on the high-end. That's a problem for PalmSource too, as phones built on both platforms tend to cost hundreds of dollars.

With Symbian and Microsoft battling it out for the lions share of the smartphone market, that leaves Palm, Research In Motion—which has successfully made the move to licensing to hedge its bets—Linux and others to fight over the leftovers. Of course, the scraps may still be worth hundreds of millions of dollars.

400 Pound Gorilla
As with everything else with Microsoft, the software giant can rely on its vast resources to push its Windows Mobile smartphone platform into the hands of users. While Symbian is purely a smartphone company and PalmSource a PDA/smartphone vendor, Microsoft's mobile OS segment is a very small part of its overall business. With money not a limiting factor, the software giant has reportedly considered offering free Windows Mobile licenses to hardware vendors so they would use its smartphone platform.

But isn't that the sort of behavior that got Microsoft into trouble in the past? Yes, indeed.

Although the company has gotten off relatively unscathed from past legal woes—especially when the effort to split Microsoft into two companies failed—Europe in particular has shown some willingness to try and keep the software giant in check (see Microsoft Prepared to Strip Media Player). Perhaps the European Union won't stand by idly while one of its brightest mobile communications companies falls under attack.

Whatever happens, Symbian and PalmSource licensees may do well to start creating lines of smartphones that aren't so expensive. We know PalmSource had that in mind by going to a two-pronged platform system with Garnet and Cobalt (see PalmSource's Enterprising Strategy).

Garnet, formally Palm OS 5, was supposed to be for cheaper smartphones, while Cobalt would handle the high-end. With Cobalt devices still a no show, however, Garnet smartphones like the Treo 600 remain at the high-end with high-end prices.

palmOne Treo 650
Speaking of lower-priced Palm smartphones, there have been reports that when palmOne's next-generation smartphone, the Treo 650, finally ships, the company will continue to offer the current model, the hugely successful Treo 600, but at a lower price. In addition, the Wall Street Journal's venerable technology critic Walter Mossberg said recently that as few as one carrier will offer the new smartphone by the end of the year.

If true, that will surely disappoint consumers looking forward to their operators carrying the eagerly awaited mobile handset. It is also likely that the Treo 650 will be a Palm OS Garnet and not a Cobalt smartphone (see palmOne May Ship Treo 650 Next Month).