Palm to unveil cell phone with Microsoft software

Microsoft Corp. and its longtime rival in the mobile software market, Palm Inc. are set to unveil on Monday a cell phone that will run Microsoft's software, sources said on Friday.

SEATTLE (Reuters) - Microsoft Corp. and its longtime rival in the mobile software market, Palm Inc. are set to unveil on Monday a cell phone that will run Microsoft's software, sources said on Friday.

The new mobile device, the Treo 700, will be offered by wireless carrier Verizon Wireless and will be able to access the Internet, news and e-mail, just like previous Treos, sources familiar with the companies' plans said.

Microsoft, Palm and Verizon, a joint venture between Verizon Communications and Vodafone Group Plc, all declined to comment, but the three companies issued a press release saying they would hold a joint news conference on Monday. Microsoft Chairman Bill Gates was scheduled to attend the conference, to be held in San Francisco.

"Palm has long been expected to make a version of its Treo that works with Windows," said one industry analyst, who declined to be named.

Palm, which pioneered the handheld computing market, has been struggling for the last five years against stiff competition from deep-pocketed Microsoft and Research in Motion, Ltd., the maker of Blackberry wireless e-mail and communication devices.

Palm, based in Sunnyvale, California, spun off its unit that makes the software for such devices as PalmSource in 2003, but that business has since struggled and is now set to be acquired by Japanese software company Access Co. ltd. for US$324 million.

Palm's shares rose sharply in after-hours trade late Friday, gaining 5.3 percent to US$30.20 on the Inet trading system from their Nasdaq close of US$28.69.

Microsoft shares were unchanged from their Nasdaq close of US$25.27 and Verizon shares were down slightly from the New York Stock Exchange close of US$32.16.

Microsoft, which is trying to expand its software offerings beyond the desktop, has been pushing to gets its software onto mobile phones and handheld devices.

In May, Microsoft unveiled the latest version of its mobile telephone software, Windows Mobile 5.0, with the ability to run miniature hard drives and support new features in cell phones such as walkie-talkie style "push-to-talk."

Microsoft, based in Redmond, Washington, is also competing against European cell phone software maker Symbian Ltd., which is a strong competitor outside the U.S. market.

(Additional reporting by Franklin Paul and Sinead Carew in New York)
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