The decision by Palm to introduce a new version of the Treo using Windows Mobile 5.0 should not come as a surprise to anyone given the fact that the TREO is already the best selling smart phone on the market and Palm is determined to keep it that way. While the Palm OS is a great OS, the fact that it did not have strong IT support in enterprise markets, especially when Microsoft’s Exchange architecture was at the center of an IT deal, this move now assures Palm that their Treo with Windows Mobile can get a piece of this business as well.

This is a very smart move by Palm since it can only enhance their position as a market leader in smart phones. And, it will allow them to be considered for major IT deals where Windows Mobile is a key part of the program.

This will also give HP and Dell serious competition in the Windows Mobile hand held market since the Treo is already perceived as the best of breed in smart phones and from a design standpoint, Dell and HP have a lot to do to catch up with the Treo’s look and feel and one handed usage model.

Palm’s decision to back Windows Mobile should not be viewed as Palm giving up on the Palm OS though. In fact, I am sure they are going to use and support the Palm OS for many years to come. But the Palm OS will most likely be optimized for use in more consumer oriented devices, and especially the PDA’s Palm is making for the consumer and SMB markets where the need for Windows Mobile support for back end architectures is not an issue.

Indeed, the thousands of Palm developers and tens of thousands of programs written for the Palm OS will continue to help Palm grow what they call the “Palm economy.”

However, this is also good news for the Windows Mobile developer community since Palm’s backing of Windows Mobile will help them grow their market demand as well.

So, be careful of comments that say the Palm OS is dead or that it has no future.The newest version of the Palm OS, which is more multimedia rich, will allow it to become a great OS for use on hand held devices where audio and video are important.

Palm’s Lifedrive is a good example of that and I expect to see other new devices from Palm and other Palm OS licensees back the Palm OS on A/V based consumer devices in the future.

But, the move by Palm to include a Windows Mobile 5.0 based Treo in their line is good news for Palm, Microsoft and IT customers everywhere and can only help grow the entire smart phone market in the future.