Palm said during its first quarter conference call Thursday that it planned to dump Windows Mobile for its phones in favor of its own webOS mobile operating system. Not a huge surprise considering Palm has staked its future on webOS, starting with the launch of the Pre in June.
Still, it's a setback for Microsoft as it tries to gain ground in smartphone market against the likes Apple and BlackBerry-maker Research In Motion and Google's new Android operating system.
Windows Mobile is already struggling, with its share of the smartphone OS market falling to 9% in the second quarter compared to a year ago. Losing Palm also means Microsoft will lose potential customers for its Windows for Mobile Marketplace app storefront.
Microsoft may be pinning its hopes for the next major upgrade of its mobile platform on social networking. A post on mobiletechworld highlights a recent job posting by the software giant suggesting Windows Mobile 7, expected to be released in late 2010, will be have an emphasis on social networking, similar to Motorola's new Android-based Motoblur system.
In the meantime, Microsoft has also opened its mobile options beyond Windows Mobile through a broad partnership with Nokia announced in August. Under the agreement, the companies will work together to develop Microsoft applications optimized for Nokia devices including a Symbian-flavored version of Microsoft Office. The Symbian operating system, which powers most Nokia phones, has 51% of the smartphone market.
But without its own smartphone, Microsoft may have to open up even more to compete in a mobile market shifting toward open operating systems like Android or new proprietary ones like webOS. Or else it faces market share shrinking to zero.