Compal Communications Inc., a Taiwanese ODM (original design manufacturer) of handsets, is scheduled to start delivery of smartphones based on Microsoft's platforms to Motorola and Palm at the end of this year, which will most likely help the firm turn profitable next year, according to company sources.

Although spending one and a half years on developing Microsoft's platform-based smartphones, Compal Communications hasn't seen its overall shipment of smartphones increase significantly due mainly to a prolonged sales recession of its major smartphone client Motorola in recent years. As a result, Compal Communications has shipped only about 10 million smartphones annually over the past three years.

However, a turnaround is expected to hit Compal Communications this year as the firm has landed orders from Motorola and Palm for smartphones installed with Microsoft's operating systems.

In fact, since deciding to completely develop and produce Microsoft's platform-based smartphones in house about three years ago, Motorola hasn't placed orders for such handsets with Taiwanese handset ODMs for a time. But, suffering declining sales in the world recently, the U.S.-based brand has resumed outsourcing such smartphones to contract suppliers, with Compal Communications to start delivering its Q series smartphones at the end of this year.

In the meantime, PALM has already placed orders for about 5 million smartphones with Compal Communications. The brand has focused its promotion in the market for smartphones and earned good recognition of consumers over the past few years. However, the brand has also suffered lackluster sales recently due to incomprehensiveness of its product lineups, and hence has resolved to outsource Microsoft's operating system-installed smartphones on an ODM basis from Compal Communications.

With an influx of orders for Microsoft's platform-based smartphones, Compal Communications will hopefully see sales of its smartphones turn profitable next year, according to industry insiders.