So, a 50-50 chance for a deal. Sounds about right, with Carol Bartz the wild card that could swing the odds as quickly and easily as she drops the F-bomb and with Microsoft as the desperate gambler looking to win back the deed to the search market it lost. Said Citi’s Mark S. Mahaney, “Although we view the likelihood of a major transaction as unlikely near-term, we continue to view Yahoo as the only logical long-term acquisition target for any company seeking scale in Internet advertising.”

“The key thing was our CEO, Ed Colligan, had the insight that once the [BlackBerry] Pearl came out, the smart-phone business was going to be a consumer business, and Palm was not positioned for that and needed a major transformation, and that’s what we got involved in doing. The whole notion was you wanted to take that cultural legacy of innovation that created the Pilot and the Treo and then apply it to the next customer.”

–Roger McNamee lauds Palm CEO Ed Colligan at our recent D: All Things Digital conference

Now we know why it was Palm executive chairman Jon Rubinstein and investor Roger McNamee on stage at D last month talking up the Pre, and not CEO Ed Colligan: Colligan was on his way out.

On Wednesday, Palm (PALM) named Rubinstein as its new chairman and CEO. Come Friday he’ll succeed Colligan, who is leaving the company after 16 years to join McNamee at Elevation Partners. Apparently Palm, who recruited Rubinstein, a former Apple (AAPL) engineer, to turn the company around has decided it would much rather have him in its highest office than Colligan under whose leadership it was foundering.

In a statement, Rubinstein–who has spent the past two years quarterbacking the development of the Pre and its webOS–welcomed his new role. “I am very excited about taking on this expanded role at Palm,” he said. “Ed and I have worked very hard together the past two years, and I’m grateful to him for everything he’s done to help set the company up for success. With Palm webOS we have ten-plus years of innovation ahead of us, and the Palm Pre is already one of the year’s hottest new products. Due in no small part to Ed’s courageous leadership, we’re in great shape to get Palm back to continuous growth, and we plan to keep the trajectory going upward.”

Reached for comment late Wednesday afternoon, Roger McNamee offered up this rather canned statement on Palm’s leadership transition: “With Ed’s decision to step down, Jon Rubinstein is the natural choice to lead Palm into its next phase of growth. Jon has proven to have exactly the right mix of product vision, organizational leadership and operational capabilities to help Palm regain a leadership position. We are grateful for the leadership role Ed has played in initiating this transformation and getting through the successful launch of webOS and the Pre.”

Palm shares are up 3.75 percent at $12.44 on the news.

Java has a new evangelist: Oracle CEO Larry Ellison.

In his first public comments since announcing the Oracle (ORCL) acquisition of Sun Microsystems (JAVA) in April, Ellison told attendees of Sun’s annual JavaOne conference that he plans to continue promoting it.

“[Oracle] has invested more than anybody else in Java technology in terms of dollars over the years, and we intend to invest–and accelerate our investments–going forward,” he said, responding to concerns that this, the 14th JavaOne conference, might be Sun’s last. “I don’t expect a lot of changes, just expanded investment and a lot of enthusiasm coming from Oracle.”

Enthusiasm, indeed. Ellison clearly has big expectations for Java which he sees being used in consumer products such as netbooks or mobile devices. “I’m reading a lot in the newspaper about devices based on Java that are Android devices, which is very exciting,” he said. “And there are going to be net-netbooks based on Android. And I think … we can see lots and lots of Java devices, some coming from our friends at Google. But I don’t see why some of those devices shouldn’t come from Sun-Oracle. … So I think you’ll see us get very aggressive with Java and developing Java apps for things like telephones … and netbooks. There will be [computers and devices] fundamentally based on Java and JavaFX not only from Google, but also from Sun.”

Seems that Ellison, who a decade ago bloviated endlessly about “thin-client” computers only to see that market falter and fail to take off, is circling back to take another run at it, this time with netbooks.

[Note: The post below was updated 06.03.09 with quotes from the raw transcript of the interview]

Microsoft’s new search engine Bing–which debuted at our D7 conference last week–unexpectedly went live this morning ahead of its scheduled June 3 launch date and it’s already done much to distinguish itself from Microsoft’s previous efforts in search.

Certainly, there’s far more verb potential in Bing than “Microsoft Live Search,” the service it’s replacing. And–beyond all this silliness about Bing’s prowess in adult entertainment queries (ever tried a similar search in Google (GOOG) or Yahoo (YHOO)?)–there’s a lot to impress. Bing is fast–very fast, actually. Its local results are robust, accurate and usable.

This search for “pizza near 94117,” for example, returns not just a list of pizza parlor homepages, but phone numbers, directions, reviews, coupons and bird’s eye maps as well. Video search is deep and the ability to further calibrate it by length, screen size and resolution is a nice touch. It offers a 411 service similar to Google’s.

And it’s UI is sleek, although the choice of hot air balloon background is begging for a wisecrack. There’s plenty of hot air in Microsoft’s claim that Bing is a “decision engine, designed to empower people to gain insight and knowledge from the Web, moving more quickly to important decisions.” That said, the engine does seem to be delivering, at least initially, on that promise.

Question is: Can Bing boost Microsoft’s market share in search from the mid-single digits to something more respectable?

Reports claim that Microsoft Live Search, once known as Windows Live Search and, prior to that as MSN Search, will henceforth be known as…

Bing.

Which is pretty much what we’ve expected all along. Just what form Bing will take is another matter entirely. Will it simply be Live Search updated and recast? Or will it involve something more? Like perhaps that long-rumored deal with Yahoo (YHOO) BoomTown’s been talking about? Or what if, ZDNet’s Mary Jo Foley speculates, “Microsoft and Yahoo announce some kind of jointly-managed company that will trade ad sales for search engine placement. This ‘MicroHoo’ won’t be a merged Microsoft-Yahoo. Instead it will be some kind of ad/search entity.” What if, indeed. We may find out later this week.

UPDATE: Interesting. ZDNet’s Larry Dignan points to a report from Jeffries analyst Katherine Egbert that suggests Microsoft is indeed preparing for some sort of joint venture or acquisition. A quick excerpt:

“It’s also possible that Microsoft could debut a partnership or make an acquisition of some type that will bolster its online search presence. The software giant registered an LLC Corp. in Delaware last week, a move often made in advance of acquisitions or joint ventures. The registration gave rise to widespread speculation that Microsoft would acquire Citrix since the name of the LLC is somewhat similar to Microsoft’s code name for Citrix. While that’s possible, the timing of the registration and recent debt raise indicate that it might be more likely Microsoft uses the LLC to form a partnership that will boost the amount of traffic flowing through its search engine, perhaps through a partnership with Yahoo! or others.”

Interesting thing to say in advance of a product launch on which so much is riding, don’t you think? Unless you’re already trying to foster the perception of excess demand. As Gartner analyst Hugues De La Vergne noted last month, “It’s important to have a success like selling out. The Pre has to live up to the hype or else they’ll lose their momentum to rival products coming out soon after.” And clearly, that’s a very real danger here. Though, to be fair, there are other possible explanations. It could simply be responsible production scheduling. It might also be that Palm’s financial situation has forced the company to temper its launch run-rate in order to retain adequate capital for marketing and customer service. Or it could be that Pre really is the blockbuster device Palm (PALM) and Sprint (S) believe it to be and no amount of supply will be enough to meet the initial and overwhelming demand for it. It could be that the Pre is the next Apple (AAPL) iPhone.

“What the iPhone has shown is that if you really do have a compelling device that is revolutionary then customers will switch to your service,” said Hesse. “We think the Palm Pre stacks up very well against the iPhone.”

We’ll find out come June 6.

Sources with knowledge of the situation said the company is expected to demonstrate it at our D: All Things Digital conference next week.

Microsoft CEO Steve Ballmer is scheduled to appear onstage at the event, a three-day event that hosts top players from the tech and media industries in interviews by AllThingsD.com Co-executive Editors Walt Mossberg and Kara Swisher.

Code-named “Kumo,” the search engine is a major effort by Microsoft (MSFT) to raise its hand to table stakes in the battle for search market share with Google (GOOG)–something it desperately needs to do.

According to the latest metrics from comScore (SCOR), Google’s share of the search market rose to 64.2 percent in April from 63.7 percent in March and from 61.6 percent from a year ago. Meanwhile, Microsoft’s market share for the month topped out at 8.2 percent, down from 8.3 percent in March and 9.1 percent a year ago.