Tapwave will be putting the operating system to use in a device, code-named Helix, that's due in the fourth quarter. The system will synchronize with a PC and have organizer functions, but it is primarily meant to be a portable gaming device.
"Our device is designed as mobile entertainment gear for those who have outgrown the Game Boy experience," said Bryon Connell, Tapwave co-founder and senior vice president of marketing.
Sources expect another company to be announced as a licensee this week.
Palm representatives declined to comment.
The company, which is the market share leader for both handheld devices and their operating systems, is hosting its PalmSource developer conference in San Mateo, Calif., on Tuesday and Wednesday. Current licensees, including phone manufacturers Samsung and and watchmaker , are expected to attend the conference. David Nagel, CEO of the company's PalmSource software subsidiary, is slated to present a sneak peek at the next generation of the Palm OS, version 6.
Helix, which will come with version 5.2 of the Palm OS, will have a built-in joystick and a color screen with a resolution of 320 by 480 pixels. It will also have built-in Bluetooth wireless support to allow people to participate in multiplayer games.
The device's price will compare to those in the gaming consoles range, around $300, Connell said. He and CEO Peng Lim founded the company in 2001 after stints with Palm, and are joined by several other former Palm executives.
While the Mountain View, Calif.-based company is targeting people from those in their late teens to those in their early 30s, Connell expects 20-somethings to be at the heart of its target audience.
Tapwave will work with developers to create games for the Tapwave device.CNET News.com Staff Writer Ian Fried contributed to this report.