Palm Unveils Treo Pro to Battle BlackBerry

NEW YORK (Reuters)- Palm Inc unveiled a Treo smartphone Wednesday based on Microsoft Corpsoftware to compete for business users against rivals such as ResearchIn Motion’s BlackBerry.

The new Treo Pro will be sold by Vodafone Group Plc and 02 in Europe in September, and by Telstra in Australia, Palm said.

In the United States, Palm does not have an agreement with a carrierto sell the phone, but it said enterprise demand is growing forunlocked phones that can work on any network.

CL King analyst Lawrence Harris noted, however, that the Treo Pro’sprice tag of $549 is high without the subsidies typically offered bycarriers to lock in subscribers.

"Given the pricing and lack of carrier sponsorship in the U.S., webelieve initial sales of the Treo Pro will be limited," said Harris,adding that only 21 percent of Palm revenue came from internationalsales in its fiscal year 2008.

The Treo Pro is Palm’s second phone with Wi-Fi, a short rangewireless technology that could boost Web speeds in weak cell phonereception areas, and Global Positioning System (GPS) technology thatsupports features such as directions.

Palm said the use of Microsoft’s Windows Mobile 6.1 software wouldhelp it compete with RIM’s BlackBerry Bold, a high-speed phone thatgoes on sale in Canada this week and is expected to be launched in theUnited States later this year.

"We’ve chosen to partner with Microsoft to compete effectively withRIM," said Brodie Keast, Palm senior vice president for marketing, buthe added that there was plenty of room for both companies to grow inthe smartphone market.

"Even with the growth in this market, 90 percent of the marketdoesn’t have a smartphone. It doesn’t make sense to fight over the 10percent," said Keast in a telephone interview. "We want to reach out topeople who don’t have a smartphone, not people who already love RIM."

Keast said it was likely that more Palm devices would include Wi-Fiin the future as there is growing demand for alternative connectivityin areas where phone reception is weak, or when users want fasterspeeds to download big files.

"Going forward for premium, fully featured devices, Wi-Fi is a requirement," he said.

Keast said Palm was on track to come out with a new phone softwareplatform aimed at consumers in the first half of next year, and thatthis would put it in more direct competition with the iPhone from AppleInc.

He said he does not see the iPhone, which now supports corporate e-mail, as a direct competitor to the Treo Pro.

Palm shares were down 13 cents, or 1.7 percent, at $7.67 on Nasdaq in midday trading.

(Editing by Brian Moss)