Should Palm dump its Linux-based OS efforts and embrace Android instead? Fortune makes a persuasive argument why the struggling smartphone maker should stop spinning its wheels trying to bring out its own OS (slated for the first half of 2009) and concentrate instead on making applications, especially since the old reasons for having your own OS—“cool factor, pricing power and influence”—no longer apply. In regards to the cool factor, Android allows for customization, so Palm could still create something unique to it. As for price, Android is free, and comes with no licensing fees. Finally, influence, these days, increasingly belong to applications, not operating systems. Plus, it was Palm’s calendar and address book that really made its devices popular.

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Fortune concedes it’s a risky strategy for Palm (NSDQ: PALM). Going with Android would certainly not sit well with Microsoft (NSDQ: MSFT), not a company that Palm wants to annoy, considering its most profitable handsets are Windows Mobile-based Treos. Or, it could try another tack: as one analyst told Fortune, “Palm might get more mileage by threatening to go with Android and wringing concessions out of Microsoft, than by actually doing it.”