You're correct that "Palm" hasn't exited the Chinese market, because there are actually two different "Palm" companies now: palmOne, which makes most of the Palm hardware, has indeed exited the Chinese market (or had, perhaps they're tentatively getting back into it now), but PalmSource, which makes the Palm operating system, has not, and is still actively pursuing new licensees in China.
I appreciate your thoughts on other markets, but actually we don't see a whole lot of potential in Korean/Japanese or Chinese students. With Japanese and Korean learners of Chinese, the market for electronic dictionaries is in fact so big that there are a lot of really high-quality products out there already; we might be a big player in the market for Chinese learning software for Westerners, but we don't have the resources to go up against the likes of Canon and Sony. Especially since most of the good Japanese-Chinese and Korean-Chinese dictionaries have likely already been tied up in exclusive licenses.
The exclusive licensing problem is even bigger in China (in fact we've already lost a great deal of money because of it, for reasons I'm not allowed to discuss), but the really big problem there is piracy: to have any chance of making money in China we'd have to go for the Kingsoft strategy of selling our software in bookstores for $3 a copy, and our margins on that would be so low that it would barely be worth the effort. On top of which, PDA's in China almost always come bundled with a Chinese dictionary and handwriting recognizer already.
Plus, making a dictionary for Chinese speakers learning English is really a very different problem than making one for English (or even Korean or Japanese) speakers learning Chinese: the focus needs to be on English words, we'd need spoken English pronunciation, a vast and Chinese-oriented English-to-Chinese dictionary and a completely different Chinese-to-English one as well (with more synonyms for each word, usage examples, etc) - it would be almost as much work as an entirely new product. It would be a fun project to work on, actually, and I'm sure we could come up with some interesting new features that the Chinese manufacturers hadn't offered yet (read-along dialogs, training for different English accents, some neat ways of remembering grammar rules, etc), but given the licensing difficulties and the poor revenue prospects I just don't think it's worth the investment.
Oh, and on your other Pocket PC comment: it's true that a large percentage of our users are buying their handhelds to use our software, but at this point palmOne isn't really producing handhelds that people want to buy anymore (at least not like they used to) - if in order to run our software a customer has to shell out $350 for an ugly-looking PDA that crashes a lot, that's going to make them significantly less likely to buy our software. Plus there are all the people at corporations that have standardized on PPC (so they won't get reimbursed if they buy a Palm), people who buy their PDA's to run our software but justify their purchase by looking at all the other software they can run on them, etcetera. I don't know if a Pocket PC version will double our sales, but it's certainly going to give them a major boost.
