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A year and a half ago, Palm bet its future on its new operating system and the phones that go with it.  After an extended development period, today in Vegas, the company finally, showed its hand.

To a boisterous CES crowd mixed with people harboring both high expectations and some, expectations of failure, the company revealed webOS and the Pré handset.

The 8GB phone comes loaded with GPS and WiFi.  It has 3.1inch screen and a 3 megapixel camera  The user interface is fully touch enabled, working with gestures and point contact. It also hosts a slide out QWERTY keyboard.

Unlike some smartphones which resembling clunky, iPhone clones, the Pré looks sleek and attractive.  At 3.96inches by 2.35 (.67 thick) it’s slightly smaller that Apple’s ground breaker, though a bit thicker due to the slide out keyboard (see comparison chart. Article follows after.).   

In a tip of the hat to Apple  (where Palm’s Jonathon Rubinstein earned his stripes building the iPod line) and the company’s magnetic power cables,  the Pré goes a step further.  It can be recharged with a wireless magnetic charger (sold separately).  It also supports a USB mini-cable.

Inside the case, the Pré is loaded with technology.  A proximity sensor is set up to disable the touchscreen and turn off the display when the phone gets close to your face.   To save power, an ambient light sensor can monitor the environment and dim the display to save power in a dark room.   Like the iPhone, an accelerometer measures movement and reorients the display from horizontal to vertical as needed.

While the hardware is slick – polished enough to measure up with other high end smartphones – the fate of Palm and the Pré (which, given the stakes, seems aptly pronounced "pray") lies with the software.  Palm’s calling the O.S. a “new kind of platform” and CEO Ed Colligan is pledging “game changing simplicity.”  In a press conference, he said the pair will "redefine the center of your access point to the internet."

Some of the features are indeed innovative and brilliantly simple in their result.  Contacts, for example, are automatically linked across multiple accounts.  Synergy, as Palm is calling this feature set, can seamlessly integrate and synch address books across accounts from Outlook (Exchange supported), Google, Facebook or elsewhere.   The same is true for email aggregation. 

Calendars too are designed for cross-usage integration.  A Pré owner will be able to maintain separate calendars for home, personal or professional events.  When desired, the O.S. can  “layer” these to view on one calendar, or it can keep them separate.

Other features include the ability to run multiple applications simultaneously, integrated instant messaging and text messaging displays, full multimedia integration (including support for album cover art and browsing), and a faster “desktop grade” browser that will handle most web coding standards (CSS, HTML, XML), Flash excepted.

The Pré is scheduled to be available first in the United States exclusively in the first half of 2009.  Initially, Sprint will have it exclusively.  At a later date,  a world-ready UMTS version will also be available. Sprint’s pricing hasn’t been determined.

Palm’s financial health has fallen precipitously while the company’s worked to develop the new systems. In the second quarter, Smartphone sell-through was down 13 percent year over year to 599,000 units. Smartphone revenue was down 39 percent to $171.0 million.    Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) for Q2 totaled a loss of $55.8 million. Palm raised extra capital from Elevation Partners to help carry the company forward through the delivery of the new OS and phone.

The stakes for the company are unquestionably high. It will take some time to determine if the Pré  and OS will be significant enough to restore the company’s fiscal well being, and bring back market share lost in recent years to Apple and RIM’s innovations.  The smartphone market is highly competitive. But if the measure of a phone is features others will likely copy, at first glance, the new Palm OS does impress and the Pré  is off to a sound start. 

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