Palm's plans to release a Linux-based Smartphone Operating System have just been overshadowed by Google and the "Open Handset Alliance." They are currently in the process of announcing Android, a Linux-based, open-source Linux-based Smartphone Operating System. Live coverage is available from Engadget

Android has some powerful muscle behind it, in the form of over 30 big players in the Smartphone scene - including Sprint, HTC, T-Mobile, Broadcom, Qualcomm, eBay, Synaptics, and Wind River. That last is particularly interesting to Palm fans as Wind River had originally been slated to be a major player for the cancelled Palm Foleo.

Android clearly represents the most significant challenge to Palm since the iPhone - it is set to compete directly with Palm's planned OS with what looks to be a significantly bigger set of supporting companies and likely a bigger set of interested developers. An early SDK will be released next week and the OHA anticipates that handsets will be available in mid-2008. For those of you keeping score, Palm has yet to announce SDK availability and their best guess as handset availability for their new OS is sometime in early 2009.

The OHA claims that Android will be a full Smartphone OS with a robust HTML browser built-in. The license will be based on the Apache license, meaning that companies are able to build their own customizations to the OS without necessarily submitting them back for inclusion in Android. In other words, manufacturers will be able to differentiate their Android-based smartphones.

Google also claims that it is unlikely, as has been rumored, that these handsets will be "completely ad driven."

Palm is notably absent from the list of companies signing on to the project, as is Microsoft, Research in Motion, and Apple. One can't help but wonder if Palm might not be better off letting Google develop the Linux platform so they can focus their efforts on their strong suit: User Interface "special sauce." Forum member gksmithlcw adds an excellent point - that in addition to "Special Sauce" Palm could also the the only company to add backwards-compatibility with the 'classic' PalmOS.

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Update: This from a Palm's Spokesperson:

Palm has always been committed to open platforms for developers. And Palm has the added differentiation of being able to tightly integrate the software platform with our hardware design, which we believe gives us an advantage in delivering a great user experience.

Palm customers have benefited from the availability of Google services on Palm's platform, such as Google Maps for mobile on Palm OS. And we look forward to further collaboration with Google to offer great user experiences on Palm products.

...So the story will be that Palm's "special sauce" is more than just "UI enhancements" but also tight integration between the hardware and the software. That could indeed be important as both Android and the new PalmOS start to show up - the devil, as they say, is always in the details.