Palm is abandoning efforts to develop Windows Mobile-based handsets to focus on its in-house operating system, company President and CEO Jonathan Rubinstein said during a conference call with analysts.

“While there are still Centros and Treo Pros moving through the channel, our future engineering efforts will be based around webOS,” Rubinstein said, according to a transcript by Seeking Alpha. “To build really great consumer products, you have to control the entire experience and own the operating system and services.”

The move to ditch WinMO comes as Palm reported sluggish sales of its flagship handset, the Palm Pre. The smartphone was touted as an iPhone killer before it was released in June but has failed to live up to the hype. Though Palm is refusing to break out sales of the Pre, the company shipped a total of 823,000 units during its August quarter, the vast majority of which were attributed to sales of the Pre.

By comparison, Apple's iPhone 3GS sold 1 million units within five days of its June release and managed to sell 5.2 million of the devices in one quarter alone. Palm has sold just 1.3 million Pre handsets in the past two quarters, according to generally accepted analysts’ estimates.

The Palm Pre’s slow sales topped off an otherwise grim quarter for Palm. The company saw its sales slump to just $68 million from $86.7 million last quarter, and its losses widened to $161.1 million from a loss of $91.52 million last quarter.

The company is pushing forward with devices despite the Pre’s disappointing sales. Palm cut the price of the Pre to $149.99 with rebates and a two-year contract with Sprint and also announced a new handset – the Pixi. The sleek handset is customizable and features a full Qwerty keyboard. Like the Pre, it will be sold exclusively through Sprint in the U.S.

Palm also said it will be adding new features to webOS, though it declined to provide specifics. The company said a fifth update to the Pre will be “coming soon.”

Palms quarterly earnings releases occur every 13 weeks. The three months ended May 31 marked the company’s fourth quarter. The three weeks ended August 31 marked the companies first fiscal quarter for 2010.

A transcript of the earnings call was provided by Seeking Alpha. Palm has not yet provided an archived audio recording of the conference call.

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