MobileRead Forums - View Single Post - Was the Palm split real? Or was it all a sham?

Traecer Prime · 06-30-2005, 02:12 PM

...I can tell you the split made sense. It would have made even more sense 1, 2, or even 3 years before, but Palm was hamstrung during that period by tax laws and an overbearing corporate parent. At the time, Palm, Handspring, Sony, and HandEra were all using Palm OS, and there were rumors that Toshiba and Dell were turned away from Palm OS because Palm (the hardware division) didn't want competition from them. Regardless of rumors, it was obvious Palm was not set up as well as Symbian or Microsoft to license their OS since every new license represented a new competitor to itself. But tax laws required that the PalmOne/Source split not happen for a period of time (1 yr or 2, I forget) after the 3Com/Palm spinoff. If the PalmOne/Source split happened immediately, the shareholders faced significant tax penalties.

The problem with waiting was that the PDA market started to crater during that time. By the time it finally happened, HandEra had exited the market completely (not surprising), Handspring was looking at smartphones to save it, and Sony found itself in a world of trouble (not all of which was PDAs). The split (and simultaneous merger with Handspring) should have strengthened both resulting companies. PalmSource was finally free to license Palm OS to whomever they wanted without regard to PalmOne. PalmOne was (theoretically at least) no longer responsible for developing the software platform, and could concentrate on making the best devices. Plus, with the Handspring merger, they picked up a ready-for-production new smartphone product line. Things should have been great for the two companies. But the continuing decline (some say maturity) of the the PDA market caused sales of PalmOne's core product line to decline, and caused PalmSource's second biggest licensee Sony to finally exit the market. Lagging PDA sales have prevented new licensees from signing up with PalmSource, and their lack of a viable smartphone OS offering has crippled their potential revenue stream (frankly, though Cobalt is better than Garnet, it doesn't provide anything other smartphone OSes have). The China MobileSoft acquisition is supposed to help remedy that situation, as is Palm OS/Linux, but we'll have to wait and see how that plays out.

06-30-2005, 02:12 PM	#3
Traecer Prime Connoisseur Posts: 54 Karma: 27 Join Date: Aug 2004 Location: Time and Space, the perfect escape Device: Sony PRS-T2	As a Palm, Inc. shareholder at the time... ...I can tell you the split made sense. It would have made even more sense 1, 2, or even 3 years before, but Palm was hamstrung during that period by tax laws and an overbearing corporate parent. At the time, Palm, Handspring, Sony, and HandEra were all using Palm OS, and there were rumors that Toshiba and Dell were turned away from Palm OS because Palm (the hardware division) didn't want competition from them. Regardless of rumors, it was obvious Palm was not set up as well as Symbian or Microsoft to license their OS since every new license represented a new competitor to itself. But tax laws required that the PalmOne/Source split not happen for a period of time (1 yr or 2, I forget) after the 3Com/Palm spinoff. If the PalmOne/Source split happened immediately, the shareholders faced significant tax penalties. The problem with waiting was that the PDA market started to crater during that time. By the time it finally happened, HandEra had exited the market completely (not surprising), Handspring was looking at smartphones to save it, and Sony found itself in a world of trouble (not all of which was PDAs). The split (and simultaneous merger with Handspring) should have strengthened both resulting companies. PalmSource was finally free to license Palm OS to whomever they wanted without regard to PalmOne. PalmOne was (theoretically at least) no longer responsible for developing the software platform, and could concentrate on making the best devices. Plus, with the Handspring merger, they picked up a ready-for-production new smartphone product line. Things should have been great for the two companies. But the continuing decline (some say maturity) of the the PDA market caused sales of PalmOne's core product line to decline, and caused PalmSource's second biggest licensee Sony to finally exit the market. Lagging PDA sales have prevented new licensees from signing up with PalmSource, and their lack of a viable smartphone OS offering has crippled their potential revenue stream (frankly, though Cobalt is better than Garnet, it doesn't provide anything other smartphone OSes have). The China MobileSoft acquisition is supposed to help remedy that situation, as is Palm OS/Linux, but we'll have to wait and see how that plays out.