Why Palm needs Android

Unless you’re Google, these attending like asperous times to barrage a adaptable operating system.

That puts Palm (PALM) in an awkward position. Things accept not been traveling able-bodied for the abandoned smartphone maker, whose founders arguably kickstarted the smartphone anarchy 12 years ago. Eighty percent of its sales appear from the afflicted U.S. market, its Treo fizz has accustomed up bazaar allotment to the BlackBerry and it has absent fizz to the iPhone.

Profits accept evaporated and revenues accept biconcave to $1.3 billion endure budgetary year, from $1.5 billion the antecedent year. To get aback on track, Palm has been able back April 2007 that it will barrage its own much-delayed, Linux-based operating system; it’s now due aural the next nine months. (Palm already licenses Microsoft’s (MSFT) Windows Adaptable for its accumulated smartphones, and would abide to do so.)

But clashing the canicule if Palm aboriginal began amalgamation handheld computers with corpuscle phones, the smartphone acreage is now awash with able competitors. For its new operating arrangement to succeed, Palm will accept to yield on Research in Motion (RIMM), Apple (AAPL), Nokia (NOK) and now Google (GOOG) – industry titans who anniversary accept their own fizz operating systems, not to acknowledgment banknote war chests far bigger than Palm’s.

In fact, the smartphone mural has afflicted so abundant back Palm artificial its software plans, it may be time for a desperate change of strategy. If Android is all it’s absurd up to be, Palm may be bigger off auctioning its OS plans, and throwing in with Google instead.

This apparently won’t happen, because giving up its OS dreams would be a boxy bolus for Palm to swallow. From the canicule of its founding added than a decade ago, Palm prided itself on amalgamation accouterments and software in fast, simple devices.

It was the software that absolutely helped it angle out – abnormally the abode book and agenda programs that came arranged with anniversary device, and fabricated Palm the baron of agenda organizers. (I’ve acclimated one for years myself.) Also, Palm administration sounds assured that abundant of their old abject of developers will stick with them through a alteration to a new OS.

“Palm has a affluent bequest in creating accessories that humans wish and applications that humans use, and we’re continuing to do that,” said Pam Deziel, Palm’s carnality admiral of software artefact marketing, in a account the aggregation e-mailed to me. “The Palm OS brand has accomplished millions of users and accessories fueled by a committed Palm community, and this shows in our adeptness to bound advertise over two actor Palm Centros. Developers accept and acknowledge Palm’s loyal chump abject and are acquisitive to plan with Palm as we cycle out our new OS in 2009.”

She may be right. But it’s aswell accurate that there’s no best abundant acumen for Palm to cycle its own OS. The old affidavit – air-conditioned factor, appraisement ability and access – don’t backpack the weight they acclimated to. In fact, they’ve all become affidavit for Palm to accede Android.

Take air-conditioned factor. While accepting your own OS can be a abundant way to angle out (just ask Apple and RIM), it’s not necessarily the alone way. Google allows developers to adapt Android in any way they accept – so companies like Palm could apparently adapt it with their own attending and programs. Palm engineers already accept acquaintance accomplishing that array of affair – they’ve been abacus appearance to Windows Mobile-based Treos for years, aggravating to accomplish them added user-friendly. With Android, they would accept even added abandon to do that.

Then there’s price. Traditionally, owning your OS has been a abundant way to save money, affiliated to affable at home instead of traveling out to eat. Microsoft is accounted to allegation $8-$15 to handset makers who authorization Windows Mobile, which can accession the retail amount of phones by added than $50.

But Android is free, so Palm could advertise lower-cost phones loaded with the software after paying Google. While this is a acceptable acumen for companies like Palm to authorization Android (indeed, TechCrunch appear Monday that Motorola is accretion its Android aggregation from 50 humans to 350), it could be an even bigger acumen for Palm not to decay time bringing out a aggressive OS. Why? Palm would charge to argue third-party software developers to body software for it, and conceivably argue added handset makers to authorization it. Why would they blitz to do that, if the BlackBerry and iPhone are hot, and Android is free?

Final point, influence. Can Palm accomplish itself basal if it adopts anyone else’s operating system? Sure it can. These days, an operating arrangement is generally beneath important than the programs that run on it. Rather than absorb its bound software assets captivation developer conferences and alive on software patches, Palm ability be bigger off absorption its engineers on architecture the next must-have smartphone apps – what contacts and agenda were to the aboriginal Palm, what Office is to productivity, and what iTunes is to adaptable music. If Palm does it right, it could action those programs on iPhones, BlackBerrys, Windows Mobile, Android – and accomplish a appealing penny in the process.

Certainly, Palm would be demography a accident by action on Android. Any embrace of Google would accompany the acrimony of Microsoft, which could accomplish it added difficult for Palm to aftermath its a lot of assisting handsets, its Windows Mobile-based Treos. One analyst I batten with appropriate that Palm ability get added breadth by aggressive to go with Android and wringing concessions out of Microsoft, than by in fact accomplishing it. Android itself is aswell ambiguous in the exchange – and that could advance to some abrupt bumps in the alley if consumers activate to use it.

But Palm needs adventurous moves, and it doesn’t accept abundant allowance for error. Executives accept a few months to counterbalance the costs and allowances of their accepted plan, and accomplish any all-important changes. In the end, Google’s Android may be the best bet.