Palm Pilot, the original big name in the handheld device world has recently stunned the technology industry. On September 26th 2005 the company publicly released that its newest smart phone would be running the Microsoft Windows CE operating system. As quoted from David Ewalt at Forbes.com, “…it was the equivalent of Coca-Cola agreeing to fill its bottles with Pepsi.”

For nearly 10 years now Palm and Microsoft have been in a head to head battle for dominance in the handheld computer industry. (The author of this blog happens to use a Microsoft powered device himself.) Palm was the originator and the innovator; they set the standard and made people realize that handheld computing was a possibility. Microsoft was left out of the loop, until they poured their billions of dollars into research and development.

“Palm made handhelds mainstream,” says Current Analysis analyst Sam Bhavnani. “The Palm Pilot [brand] was used to describe even non-Palm products, like Kleenex or Rollerblades.”

Even up until one year ago, Palm was still considered to be the front runner in the handheld software market. During the second quarter of 2004 nearly 42% of all handhelds shipped in the US were done so with the Palm operating system installed. Windows only accounted for roughly 36%. Exactly one year later in 2005 Palm fell drastically behind, holding on to only 18% of the market.

What is it that stopped Palm cold in its track? What could have happened so drastically that Palm would give up its own software in favor of that of its main competitor? Money. As mentioned before, Microsoft has billions of dollars at its disposal and can move into virtually any market they please. Also have multi-billion dollar software contracts with leading handheld manufacturers such as HP and Dell doesn’t hurt either.

Palm was being forced out of the market so abruptly that partnering with Microsoft was their only choice. Palm will now be focusing on hardware development and software development other than operating systems. Instead of OS development Palm will concentrate on business software which is compatible with the Windows operating system.

What is next for PDA’s? This is a question on a lot of people’s minds and from what it looks like, phones and integrated PDA’s are the future. Cell phone networks offer connectivity pretty much anywhere you could want to be, and it’s getting even better. With the ability to be connected pretty much anywhere, why not have your computer with you at all times and be able to feed off that same connectivity?