PalmOne considers Linux

Handheld-computer maker PalmOne is considering moves that would take it beyond the operating system that helped make the company a household name.

The Californian firm has evaluated both Microsoft-based operating systems as well as at least one version of Linux as a potential alternative operating system to the Palm OS for its handheld devices, ZDNet UK sister site CNET News.com has learned.

Sources familiar with the tests said PalmOne has been quietly exploring operating systems to augment the Palm OS for some time. The company has also been exploring partnerships that could let it use a tailored version of the Linux OS to run on its devices, according to a source familiar with the company's efforts.

The tests could presage a blow to Palm OS owner PalmSource, which counts PalmOne as its largest customer. All PalmOne devices currently use the Palm OS.

"In a perfect world, since they are really just a hardware company, they would have smartly designed products based on PalmSource's OS, Microsoft's OS and RIM's platform," said Brian Blair, analyst with San Diego-based hedge fund Dorado Capital.

Currently, PalmOne devices exclusively use the Palm OS from former software subsidiary PalmSource, which split with PalmOne just over a year ago. The separation of the hardware-making PalmOne and the software-developing PalmSource was meant to allow the two companies to chase new opportunities and markets.

Analysts said they would not be surprised to see PalmOne support other OSs, adding that if the company wasn't looking at alternatives, it would discredit one of the major reasons for the split.

On Monday, Needham & Co. analyst Charles Wolf wrote a report saying a Microsoft-based Treo is "virtually certain," although he gave no time frame for a release.

Representatives from PalmSource and Microsoft declined to comment for this story.

Although PalmOne has thus far released products exclusively using the Palm operating system, it has been keeping its options open. The company pays PalmSource a per-unit royalty, with a $40m a year minimum, under a contract lasting until 2006. But the deal is not exclusive, so the company can sell products using other software as well.