The fight for the mobile Internet just got a lot more interesting.

Palm (PALM) has struck a $44 million deal that puts it back in control of its device software, a step that was essential to the company remaining competitive with Symbian, the BlackBerry (RIMM), and Microsoft’s (MSFT) Windows Mobile platform. Though Palm for now is mum about its plans, I expect that within the next six to nine months the company will release more information about the future direction of the Palm platform – essentially the rebirth of the Palm OS.

I wrote a piece in October arguing that such a deal would be essential to Palm’s survival, and one in November explaining why I believed Palm was negotiating this very arrangement. Palm worked out the details with Access, the Japanese company that owns the OS, and put out the press release linked below on December 7. Access can continue to license the current version of the Palm OS to other companies.

Why it matters:
Because it’s looking more and more like the cell phone, not the PC, will be the global tool of choice for accessing the Internet. Millions of new subscribers are signing up every week in India, and cell phone chip makers are looking to China as a burgeoning source of demand for both low-end and mid-tier phones.

The major cell phone software players, including Symbian, Microsoft, Research in Motion and various Linux supporters, are racing to claim their slices of the market. Because it was so dependent on an operating system it could not control, Palm had been locked out of that race. Now, if it can roll out a next-generation operating system quickly enough, Palm has a chance to really compete; the prize is worth billions of dollars.

Let’s have a look at what Palm’s OS deal means to investors, consumers, competitors and developers.

Investors:
With its perpetual license to Palm OS Garnet, Palm now has the freedom to innovate with its own software for the Treo smartphone; I believe the key will be how quickly it can roll out a multimedia-adept OS, and a slim device that finally takes mobile e-mail to the mainstream.

Consumers:
Expect 2007 to be a year when Palm and the carriers try much harder to convince you that you’re not living unless you own a smartphone with a data plan. The plus: handset prices will drop. The minus: Data plans will still be too expensive, and services too confusing.

Competitors:
In all probability, Palm will release a smartphone operating system that’s simpler and more suited for the North American market than what’s already out there from Symbian and Microsoft. That’s in Palm’s pedigree. But simplicity’s not enough. Palm will have to spend time and money rallying a developer community behind its new platform, and that will give competitors time to race ahead.

Developers:
Palm will need to either lure developers to its new platform by convincing them that it will quickly get onto millions of devices, or it will need to tap into an existing developer community. Either way, the company needs to state its intentions. Fast. Mobile developers aren’t sitting still.