Palm decides not to release Foleo

NEW YORK - Treo maker Palm Inc. will not release its smartphone companion product, the Foleo, Chief Executive Edward Colligan said in a posting on the company's blog.

The product, which was announced in May and was supposed to be released during the summer, looked like a small laptop and was said to incorporate a 10-inch (25.4-centimetre) screen, full-sized keyboard and Bluetooth and Wi-Fi capabilities. The Foleo was to use a Linux-based operating system and did not have a hard drive.

In a post on The Official Palm Blog late Tuesday, Colligan said the company decided to cancel the product and focus instead on its next-generation operating system and the initial smartphones that will work with it. He said the company will take a charge of less than $10-million (U.S.) for not releasing the product.

"Because we were nearly at the point for shipping Foleo, this was a very tough decision. Yet I am convinced this is the right thing to do," Colligan wrote.

Enlarge Image

Palm founder Jeff Hawkins uses Palm's new Foleo in this undated photo. Seeking to recapture its innovative streak in mobile computing, Palm Inc. unveiled the laptop-like gadget with a full-size keyboard and 10-inch display to serve as a companion for smartphones. But the Foleo, which garnering dismal critiques from some analysts may never make it to stores. (Palm/AP)

He said the company's evaluation and early market feedback indicated there was still work to be done to make the Foleo a strong product, and Palm "can not afford to make those improvements on a platform that is not central to our core focus."

The Foleo may not be gone for good - Colligan noted that he and Palm co-founder Jeff Hawkins think the Foleo's product category has "enormous potential" and wrote that when a Foleo II emerges it will work on the company's new platform. Colligan didn't give a timeline for a new Foleo.

In a note to clients Wednesday, Morgan Keegan analyst Tavis C. McCourt, who has a "market perform" rating for the stock, said the company's decision is positive, because it lets Palm focus its limited resources on the smartphone market, which is large and growing quickly.

"We believe a new operating system combined with better hardware form factors are the key to accelerating growth in Palm's smartphone business, and we believe the transition of resources from the Foleo to the new operating system will prove a wise decision," he wrote.

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