Colligan told ComputerWire that the stories, which coincided with a 12% rise in PalmOne’s share price, seem like something that would not make a lot of sense. They seem like rumors to me.

Stories that Dell was considering a takeover of the global number-one PDA maker surfaced last Thursday. The computer giant has its own range of Microsoft-based handheld devices under the Axim brand.

However, the lack of substantiation of the stories cast considerable doubt on their integrity. Such a move would also be deeply out of character for Dell which does not habitually make acquisitions to bolster its business. The company’s last purchase, and only its second ever, came in June 2002 when it bought IT Services outfit Plural.

This did not stop considerable speculation that the rumor had substance after PalmOne’s share price shot up. This was despite the fact that the price surge was more easily attributed to a presentation given to the investment community last Wednesday by PalmOne CEO Todd Bradley.

Analysts were quick to dismiss the possibility of Dell acquiring PalmOne. It’s totally ridiculous, it makes no sense and I would put a zero probability on it, Needham and Company analyst Charles Wolf told CBS MarketWatch last Friday. However, Colligan’s remark is as close to an official denial that PalmOne has so far given the industry.

Bradley told investors the resurgent PDA maker would post $1bn sales in fiscal 2005, up 15% year over year. He said much of this success will be attributable to PalmOne’s move into the smart phone space, the division headed by Colligan, which is expected to account for more than half PalmOne’s revenue by this time next year.

Certainly, PalmOne’s move into smart phones with the Treo 600, which launched in June last year, has been a successful one. Colligan said the device, the only such model in PalmOne’s current range, shipped 137,000 units in the first quarter alone. 160,000 are expected to ship this quarter although Colligan said the potential of the device would not be fully realized due to ongoing supply problems.

The Treo 600 has been very successful. So much so that we can’t build enough of them, said Colligan. I think we absolutely could have supplied more units but right now LCD supply is very tight. Hopefully, by the middle of next month we should be in a better position.

Colligan was non-committal regarding rumors that PalmOne is set to introduce an updated Treo 600. Stories have abounded recently that the company has a variant of the device, possibly called the Treo 610, close to release featuring Bluetooth and possibly a higher-resolution display. He said Bluetooth connectivity is definitely on PalmSource’s smart phone agenda.

He said the company will launch a number of units over the coming years in the smart phone category some of which may be more voice-oriented than the Treo 600. It seems that any such devices will continue to use Palm OS, however.

You could argue that we could leverage another OS in some way. We’re certainly free to do that but there’s not much reason unless you’re really sure you can bring new features and functionality to the devices, Colligan said.

PalmOne’s loyalty to Palm OS would be an obstacle to any tie-up with Dell, which retains close ties with Microsoft across its various business sectors, not just mobile devices. However, the company has generated considerable expertise in smart phone design, especially around the integration of telephony and computing features, which would be of interest to Dell.

Much of this knowledge came with the company’s acquisition of Handspring in June 2003, a purchase that lies at the heart of the wireless business. Colligan was a former VP of the old Palm Inc before leaving in late 1998 to help found Handspring, along with PalmPilot originators Donna Dubinsky and Jeff Hawkins.

Statistics released by mobile operator Orange in the UK show touch-screen devices such as the Treo 600 and Sony Ericsson’s comparable P900 as offering considerable average revenue per user advantages over more conventionally-styled handsets. This includes those based on Microsoft’s Windows Mobile for Smartphones, such as Orange’s SPV family and Motorola’s MPx200.