Palm Inc. is teaming up with Microsoft Corp. to launch a Windows-based version of the Treo smart phone, marking the first time the hand-held computer pioneer will sell a device based on its former rival’s software.

The new Treo 700 will be offered through Verizon Wireless.

The new device will run on Windows Mobile 5.0, the latest version of the operating system that has been challenging Palm OS for years. Though the Palm OS dominated the industry, its lead has steadily lost ground to Microsoft’s offering, which is based on that company’s ubiquitous Windows desktop PC software and thus familiar to more people.

Symbolically sealing the deal Monday in San Francisco were Bill Gates, chairman and chief software architech for Microsoft (left), and Ed Colligan, Palm Inc. president and chief executive.