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Palm Almost Ready for High Fives?

PALM
PALM

In the annals of "smartphonedom" there's iPhone, BlackBerry, the latest from Nokia, and everyone else.

Palm aims to change all that. A tall order to be sure, but consider--as Palm CEO Ed Colligan does--that well over a billion handsets will sell globally this year, but only a small percentage of them are web-enabled, media devices called smartphones, that "tall order" is certainly worth some effort.

Palm is no stranger to tall orders. A year or so ago, Palm was on the ropes, Colligan's job was in jeopardy, there was talk of a tie-up with Motorola before that company's own implosion, and Palm's future looked bleak.

Very bleak.

But that was before Centro: Palm's $99 little wonder that, as it gains traction in the marketplace, could someday mean a more formidable competitor to the likes of Apple and RIMM . Oh, and Nokia. Palm is celebrating the two-millionth Centro sold on Tuesday, selling its second million units in half the time it took to sell the first million. Colligan, in my exclusive interview with him, calls that "momentum."

Look, before you go howling that this stock has largely gone nowhere, and that some well-known Wall Street analysts are calling for Colligan's head, consider that the company was up front a year ago that this would be a year of "transition." Wall Street isn't the most patient place in the world, but Palm can afford now to breathe a little easier.

Elevation Partners snapped up a big chunk of the company (amid rumors that it would snap up even more to take Palm private); Fidelity and T. Rowe Price are also major investors. But it was the Elevation deal that gave Palm some breathing room. That and the ongoing vote of confidence from Elevation's partner Roger McNamee, and the continuing influence of former Apple iPod wizard Jon Rubinstein, who's wielding enormous influence at Palm.

Listen to Colligan talk: he's got a confidence about him and his strategy that seemed far thinner a year ago. But here he is today, singing much the same tune as before, but it's far more believable this time around. Something about those two million Centros sold in fairly short order and that momentum thing, I suppose.

But Colligan isn't operating under any illusions: he knows he still has his work cut out for him, and admits to me that the job is far from over. He knows Palm isn't out of the woods yet, but now sees the light shining through those trees. He's one of the few CEOs I've talked to who appreciates the quarter-to-quarter pressure of Wall Street, telling me it helps keep him and his company focused on task. Though the deal with Elevation gives him a deeper level of patience he's probably seen from investors past.

So when in doubt, compete. And when you can't compete, create a new category. The sub-$100 smartphone. BlackBerry and iPhone will eventually get there. How long "eventually" takes will ultimately determine whether Colligan and team are crazy? Or crazy like a fox?

(Watch my complete interview with Colligan and let me know what you think. Does Palm stand any kind of chance? Or no chance at all?)

Questions? Comments? TechCheck@cnbc.com

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