Palm, the handheld PC firm, will release its latest operating system, OS 5.0, next month, with the major advance of being able to multitask.

OS 5.0, running on the ARM (Advanced Risc Machines)-compliant Omap (Open Multimedia Applications Platform) family of processors from Texas Instruments, will be unveiled at PalmSource the week of 4 February in California.

Several sources in the development community say they are both pleased with some of the new features and disappointed at what it still lacks. Palm officials declined to comment.

Three significant improvements include the ability to use multitasking and multithreading in applications, improved performance using OS 5.0 with the faster processor and compatibility with current applications.

On the negative side, Palm will not leverage the multimedia capabilities of its recently purchased Be operating system, meaning such things as MP3 will not be available.

Perhaps most aggravating to Palm users is news that utilities written by third parties, called Hacks, to expand the capabilities of the current OS, will not be supported in OS 5.0. For example, there's a Hack utility that allows users to touch the title bar and get a dropdown menu. "We were told that every single Hack will not work in the future," said a developer.

However, OS 5.0 will give Palm some enterprise-level capabilities, a source said.

"The multithread features will allow the development of peer-to-peer, wireless applications for data-conferencing," the developer said.

Faster performance will also mean that when executing a function on the Palm the user will no longer have to wait to regain control of the handheld. (With previous incarnations of the OS, users sometimes had to wait as much as 10 seconds.)

Backwards compatibility will be addressed in OS 5.0 by running the older operating system in emulation mode.

"Some of the old programs will run faster, some will run slower, and some won't run at all," said another developer. By deploying an ARM-compliant processor, the new OS will also give Palm the ability to gain a foothold in the mobile phone market.

Developers said users should see Palm devices running OS 5.0 by the third quarter of the year.