By Jon Fortt
August 31, 2007

Palm (PALM) is having a rough year. Not only has Research in Motion (RIMM) shot past the company in U.S. smartphone market share, but Apple’s (AAPL) iPhone is sucking all the air out of the room when it comes to advanced phones. So what’s the Treo maker going to do about it?

From the looks of things, go small.

Gadget blogs – most notably Gizmodo – this week
unearthed what appear to be leaked product shots
from an upcoming Palm phone that would operate on Sprint’s (S) network. There is no indication whether there would also be a version for Verizon Wireless’s (VZ) CDMA network, or for GSM networks such as AT&T’s (T).

The phone, which Gizmodo calls the “Palm Centro,” looks a bit like a shrunken Treo, with the keys on its full QWERTY keyboard crammed closer together. Online gadget fans, who panned earlier leaked shots of the device, seem to be warming up to this version.

Said Gizmodo commenter JAWZXY: “Though the silver bar is still not the most attractive implementation of a navigation bar, this phone looks worlds better than the blurry photos we had seen earlier. The keys don’t looks half-bad either. I would consider buying this.”

Even better, the rumored price is $99.

I’ve put a call in to Palm to see if the company has anything to say about its future in phones.

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