In a somewhat surprising announcement, Palm has selected High Tech Computer (HTC) in Taiwan to build the new Palm Treo Pro Windows-based phone. While Palm is said to have looked at other vendors to build the Treo Pro, HTC was selected due to their extensive level of experience building Windows Mobile Smartphones.

The selection is really surprising, since HTC and Palm are direct competitors in this market space, with HTC building and marketing their own line of smartphones, as well. The move is viewed as a move by Palm to be cautious with the Treo Pro until the company has a better idea of how well the phone is going to do.

With a crowded market space for smartphones right now and a variety of companies looking for a slice of the pie, Palm’s Treo Pro was met with a less than stellar reception by many in the media. With no major carrier announcements to go along with the Treo Pro launch, it is likely that Palm will want to see what level of excitement the Treo Pro will generate and what the sales projections look like, and going with HTC should allow them to drive the cost of the phone down; which should in turn lead to a low price in the future if the phone starts to make some waves in the market space.

So far, the largest audience that seems to be vocal and excited about the Treo Pro is the rather large segment of Treo users that have been waiting for an upgrade for their aging Windows Mobile-based Treo phones for sometime. A good number of these are in business environments where they have been standardized on Palm products for a long time. Still, it will be an uphill battle with challengers from RIM, Samsung, and Apple among others that will look to grab this market share with an opening to win some of these Palm business customers over to their brand.