So, Palm is going to produce what is essentially a Pocket PC phone. Palm also sold off that which is its primary differentiating factor: the Palm OS. Does that mean the Palm OS is dead? Should you stop buying Palm PDAs? Should you stop developing software for the Palm OS? Let's look at these questions from the perspective of the user, the developer, and the investor.

If you're a Palm OS user
If you're a Palm OS user and you like the Palm OS, there's no reason for you to jump ship now. A quick search on the rumor sites will show some indication that there may be new, aggressively priced Palm OS-based handhelds coming from Palm sometime soon.

With some limited exceptions (the class-action lawsuit against Palm for the Treo bugs being one), Palm handhelds are fine devices. They're generally nicely priced, have some of the best screens on the market, and most often work long after you start lusting for the newer models.

Without a doubt, if you like the Palm OS and you see a device you want to buy, go ahead and buy it. At least for the next year or so.

If you're a Palm OS developer
You, bucko, have got some serious thinkin' to do.

If you're a Palm OS developer, you're one of 400,000 such mobile application developers. This is a huge community of development talent and one of the biggest single reasons we expect Palm will continue to produce Palm OS devices. For the record, we've been explicitly assured by Palm management that the Windows Mobile device is a market expansion, not an abandonment of the Palm OS.

That said, you'd have to be stoned to miss the implications of what's been going on. There are some 39 million Palm OS-based handhelds out in the world, with more selling every day. There's nothing that specifically indicates that you'll lose your shirt if you keep developing Palm OS software. In fact, it's likely you'll keep making money doing so.

On the other hand, if I were a Palm OS developer, I'd certainly invest some percentage of my time into learning Windows Mobile technologies and either see about cross-porting my applications to Windows Mobile or at least diversifying my product line.

If you're an investor
Back in September of 2002, I wrote about Palm's financial problems. At that time, the company was at risk of being de-listed from the stock exchange, their products were problematic, and things didn't look so good for our friends at Palm.

Today, their revenue has grown and, in the fiscal year ending in May 2005, their net income was positive for the first time in years. Even in previous years, when net income was underwater, it was getting better each year.

So, while I have a lot of questions about Palm and I sometimes wonder just what drugs they're making out there in California, I also have to give the company kudos for doing the one thing it's absolutely responsible for doing: creating shareholder value.

While the company has definitely had its ups and downs in terms of share price and in terms of market valuation, it has, in general, improved itself considerably from what was a very bad financial place to be in. Fixing a company in the financial doghouse is a huge challenge and Palm's management appears to have pulled it off.