In an open letter to customers on Tuesday, Palm president and CEO Ed Colligan announced that his company would no longer develop its Foleo device, a much-hyped "mobile companion" for the company's line of Treo smart phones. Instead, Palm will focus its resources on developing its next generation Palm platform.

"After careful deliberation, I have decided to cancel the Foleo mobile companion product in its current configuration and focus all our energies on delivering our next generation platform and the first smartphones that will bring this platform to market," Colligan wrote in the letter, which was mailed to Palm's customers and posted to the Palm corporate blog. "Because we were nearly at the point of shipping Foleo, this was a very tough decision. Yet I am convinced this is the right thing to do. Foleo is based on a second platform and a separate development environment, and we need to focus our efforts on one platform."

The Folio was announced with much fanfare in May, with company co-founder Jeff Hawkins announcing that he was focusing his energies solely on this new product. As originally envisioned, the Foleo was a sub-notebook-like portable device, based on Linux, that would offer a full-sized keyboard and screen for those times when working with data on a smartphone's tiny screen was too restrictive. The device was designed to synchronize data between itself and a linked smartphone.

Colligan says that Palm is still interested in the Foleo and will likely a ship a version based on the next-generation Palm platform in the future, rather than continue with the current Linux-based design. This will allow Palm to focus on a single platform, and not split company resources between the two designs. (That said, COlligan also specifically said that Palm would continue to sell Windows Mobile-based Treo smartphones in addition to its own Palm-based versions.)

"Jeff Hawkins and I still believe that the market category defined by Foleo has enormous potential," Colligan added. "When we do Foleo II it will be based on our new platform, and we think it will deliver on the promise of this new category. We're not going to speculate now on timing for a next Foleo, we just know we need to get our core platform and smartphones done first."

As a result of the strategy shift, Palm will take a limited charge of less than $10 million dollars to earnings. Colligan said that while this was a lot of money, "it is a small price relative to the costs that would be required to support two platforms going forward."