Palm's New Smartphone: Close but No Cigar

Another shortfall for the Treo Pro: Palm has no wireless carrier partner in the expect to pay a premium

Life has been hard lately at Palm (PALM) as the company is struggling to stay relevant in the smartphone market it largely invented. The Treo Pro, the first product designed since former Apple hardware guru Jon Rubinstein took charge as Palm's executive chairman, is the most attractive phone Palm has offered in several years. But at a time when Research in Motion (RIMM), leader in the corporate market, is constantly improving its popular line of BlackBerry products, the Pro may not be enough to keep Palm in the game.

The Pro starts out with two strikes against it. One is that it runs Windows Mobile software, which remains clumsy and annoying despite repeated upgrades. Palm has added some exclusive enhancements to this program. Even so, it's not that easy to distinguish the Pro's software from the offerings of HTC, Motorola (MOT), Samsung, and others.

Second, Palm does not have a partnership with a U.S. wireless carrier. It will be sold unlocked and unsubsidized for $550, a steep premium to the $400 AT&T (T) is expected to charge for the new BlackBerry Bold with a two-year contract, or the $200 it's asking for Apple's (AAPL) iPhone.

Points for Design

Of course, the U.S. is not Palm's only market. Vodafone (VOD) and O2 are selling subsidized Pros in Europe—and in some cases giving them away with a two-year contract. Telstra (TLS.AX) is doing the same in Australia. Even in the U.S., few people will end up paying the full price, as the main buyers will be corporations, which get discounts on both hardware and monthly service. Still, the Treo Pro will be at a disadvantage unless Palm negotiates a distribution contract with AT&T, which has the only compatible high-speed network.

The design of the Treo Pro is a breath of fresh air, given Palm's stale line of professional products. It's a little wider and significantly thinner than the consumer-friendly Palm Centro; in BlackBerry terms, it's close to the Curve.

The 320-by-320-pixel touchscreen is bright and sharp, the phone quality is good, and the battery life, rated at 5.5 hours of talk time, is excellent. The keyboard, while more crowded than those on the current professional Treos, is well laid out, though I wish Palm had kept the curved rows of keys used in older Treos. The Pro also comes equipped with both Wi-Fi and GPS. An add-on memory card can push storage up to 32 gigabytes. In other words, it has everything you'd want on a professional smartphone.

Windows Mobile or Nothing

The problem is, hardware this nice deserves better software than Windows Mobile 6.1. The old Palm operating system, still used on the Centro and some Treos, is wonderfully intuitive, but it can't handle such key features as GPS and Wi-Fi, and it has a tendency to lock up when heavily burdened. A long-overdue replacement should arrive next spring, but for now, it's Windows Mobile or nothing.

I'm not dismissing the efforts Palm made to improve Windows Mobile usability, including a Web search box on the home screen and a button that turns Wi-Fi on and off. But Palm can't do much about the basic design of Windows Mobile (MSFT), which I use every day and still can't get comfortable with. The program constantly confronts users with a plethora of options. Even a relatively simple task, such as setting up a network connection, becomes a project only a tech professional could enjoy. The Pro is also burdened by the poor Internet Explorer Mobile browser. If you go with this device, be sure to download the free Opera Mobile browser.

Though the Treo Pro will mainly appeal to businesses, a distribution deal with AT&T would give it traction with consumers, too—and that may be in the offing. In the meantime, corporate purchases of the new phone, plus the strong sales of the Centro, should buy Palm time to finish what I hope will be a worthy successor to the original Palm operating system. The Treo Pro shows that Palm has gotten its hardware mojo back. Now it just needs to do the rest of the job.

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