Industry analysts have suggested that the alliance between Palm, Microsoft and Verizon Wireless to introduce a Windows powered version of the Treo smartphone was inevitable, but is not without its risks. 

Palm unveiled a version of its Treo smartphone running Windows Mobile on Monday. The device is slated to start shipping in the US early 2006, and marks the first device made by Palm that does not run the Palm OS software.

"This is the best option for Palm," said David Linsalata, research analyst for mobile devices at IDC.

"Palm gets a potentially larger market and PalmSource is not on a sure path, " he said, in a reference to the maker of the Palm OS switching to a Linux-based mobile operating system while being acquired.

The Windows Treo, as Palm referred to the device, includes a wireless radio for the EVDO 3G wireless network that offers data speeds up to 1.5Mb. An UMTS equipped version is not expected until late 2006.

By choosing EVDO, Palm is initially limiting its market mostly to the US, but Linsalata does not see this as a problem.

"The US has traditionally been the best market for this kind of device. It is a strong market in which to launch," he told vnunet.com.

The Treo has been a big success for Palm. Although the device is trailing behind RIM's BlackBerry, Palm more than doubled sales for the device to 470,000 units in its most recent financial quarter.

Previous versions of the Treo were all powered by Palm OS, which turned out to be both a blessing and a curse.

The software has prevented the Treo from becoming a success with enterprises wanting to integrate the device with Microsoft Exchange, according to Tim Bajarin, president of analyst firm Creative Strategies.

"If you go into IT accounts where Exchange is a large part of the architecture, Palm OS loses. [Windows Treo] allows Palm to get into the enterprise," he told vnunet.com.

Gerry Purdy, principal analyst with Mobiletrax, added: "It increases Palm's credibility in the marketplace."

But the operating system gave the Treo a loyal following of Palm fans while making it hard to compare with other Windows powered smartphones such as the O2 XDA and the Motorola MPx220. 

Moving to Windows could not only alienate these fans, but could increase the competition because Palm will have to work harder to differentiate its device from other Windows smartphones, explained Linsalata.

If users at some point become unhappy with their Palm Treo, they can now switch to a different manufacturer more easily.

Palm said during the device's unveiling that it is confident of staying ahead of the competition through its design and by offering unique software features on top of Windows Mobile, such as the ability to browse through the address book by looking at pictures.

For Microsoft the addition of the Treo to its Windows Mobile licensees is a major victory. Several Windows powered devices are available today, but few have made a splash in the market.

"Microsoft finally gets a major phone player with high volume expectations," said Purdy.