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With its smartphone market share dwindling, Palm Inc. is looking to its latest product, the Foleo, to reinvigorate the mobile computing market.

Palm co-founder Jeff Hawkins touts the device as the first in a whole new category — a "mobile companion" to bridge the gap between a laptop and the smartphone, marrying the best features of both devices into a package that is more sleek and convenient to carry around.

Palm launched the Foleo yesterday at the D: All Things Digital conference in Carlsbad, Calif., ending weeks of speculation that has circulated on the Web ever since Mr. Hawkins hinted that a new product would be announced this month.

"It's really targeted to those people who want simplified access to core applications they really use on the road, as opposed to carrying what they already have," Palm chief executive officer Ed Colligan said in a telephone interview. "We're not expecting to replace laptops. We really feel like this is a thing you'll want to carry with you on the road as opposed to what you have to carry."

Sporting a screen 10.2 inches wide and tipping the scales at 2.5 pounds, the Foleo contains many features personal digital assistant users have known for years, including the ability to instantly turn the device on and off and a long battery life. Palm engineers have given it more of a laptop feel with a full-size keyboard and larger display to make it easier to edit documents and manage e-mail.

The Foleo is designed around a Linux-based operating system and developers such as Avenue and DataViz have already brought out software for the device that is compatible with Microsoft Word, Excel and Powerpoint, and software that allows users to browse the Web using the Opera browser and check e-mail.

"We've really made it easy to use right out of the box," Michael Moskowitz, president of Americas International for Palm, said in an interview. "That's one of the critical features about the Palm Pilot and the Palm that we've tried to incorporate with the Foleo."

Initially, there is only 256 megabytes of flash hard drive space allotted for local storage (though more can be added via the Foleo's SD and USB slots). The device can only connect to the Internet through either an Internet-ready smartphone with a Bluetooth connection or a Wi-Fi hotspot. So far there are no multimedia programs such as video and MP3, but Mr. Moskowitz says that it's only a matter of time until developers create software packages for the Foleo's platform. The software developer's kit will be released later this month.

The Foleo is expected to be in stores by fall and will cost about $600. Mr. Moskowitz says he would like to have mobile carriers and retailers bundle it with Palm's Treo smartphone.

Mr. Moskowitz says that the rapid growth of wireless e-mail accounts was the driving force behind development of Foleo. Analysts forecast there will be almost 200 million accounts by 2010.

The timing of the launch couldn't be more crucial for Palm. The company has watched its share of the mobile computing market dwindle to 22 per cent, as it has lost ground to Research in Motion Ltd.'s BlackBerry and Nokia Corp.'s e6x series. In addition Apple Inc. is poised to make a splash later this month with the release of its iPhone.

There have also been continuing rumours of a possible takeover since news reports in March said Morgan Stanley had been called in to help evaluate options, including a possible sale of part, or all, of the company.

However, Mr. Colligan dismissed such rumours as "ridiculous" and said he believes the future is very bright for Palm.

"I sometimes say to myself that 'Boy, I remember when people were saying that Apple was going out of business,'" Mr. Colligan said. "Sometimes it heartens me that we can be contrarian and we can believe in what we're doing and over time, it will bear out in our market success."

But whether or not Palm can mirror the success Apple has had over the past decade remains to be seen, as investors will be keeping a close eye on whether consumers will be attracted to a device that does the same thing as their smartphone, but with a slightly larger screen.