On Thursday, President and Chief Executive Officer at Palm, Ed Colligan, announced that the company will cease development of the Palm OS mobile device environment. Colligan told shareholders at Palm that the manufacturer will now focus on the development of the Linux-based webOS, which powers the Palm Pre smartphone.

Palm OS has been one of the most popular operating systems in the smartphone market. Launched back in 1996, it was the most advanced OS on a mobile device at that time, as it was considered much more stable, faster and more featured than the then-released versions of Windows Mobile.

However, Palm OS has been criticized with time, as it was an airtight environment, so it would only work with specific hardware. Moreover, as the mobile device market expanded, Palm OS did not prove to be capable to get along with new hardware features. Still, the Palm OS was popular as its stock settings were good enough for everyday tasks, especially when flawlessly synchronizing data with computers.

As the Palm OS doesn’t seem to be able to recover, Palm is betting its money on the light-weight and snappy webOS. The operating system proved to work incredibly well on the Palm Pre, along with the smartphone’s multitouch capabilities. Furthermore, it seems that Palm will be more open to third party initiatives, in contrast with Apple’s tight rules for software developers.

Currently, Palm has to deal with other issues, too, as Apple accused it for using the same patented capacitive touchscreen which is used in the iPhone. Nevertheless, Palm denied all of Apple’s claims and it seems that the Sunnyvale-based company is keen to release its new smartphone sometime in the first half of 2009.