Palm Announces Separated Software Operations

Eharley writes: "'Palm on Monday announced it has completed the split of its operating system division from the rest of the company. The software unit will now report separately on the financial performance of its licensing business, and could eventually be spun off or sold by Palm.' Yahoo is carrying the story here. Considering that their market share in PDA devices has been slipping, is this a move that will signal the end of the Palm hardware line or organizers?"

Comments

Good move on their part.

[IGnatius T Foobar]

This is a good move on their part. Palm OS licensees are faced with the conundrum that their OS supplier is also one of their competitors. It's the DSL/ILEC thing all over again. Considering that PDA vendors have the illusion of being able to go to Microsoft for their OS instead (I call it an illusion because Microsoft is a competitior to everyone whether they realize it or not), Palm OS needs to make a better effort to appear hardware-neutral. This is a good way of doing it.

Frankly, I think that console mfrs should do the same thing. Sony and Nintendo should license their console OS's to anyone who wants to build the boxes (imagine the variety we'd see!).

Well..

[mindstrm]

It's wrong to think that every business automatically uses it's products to boost each other.

It may make very solid financial sence for palm to take steps to ensure their hardware and software sections are financially and legally separated. Maybe the COULD sell more palm devices if they used other software.. and maybe they could make more on software if they weren't stuck with a single platform.
This way.. if one fails, the other can go on.

Level Playing field

[teambpsi]

I think this is probably a very reasonable move, which allows not only the hardware division to experiment with possible altnerate OS's -- including linux, beos, and probably qnx

But it makes more sense from a sub-licensor standpoint, in that the money you pay isn't necessary going to your direct competitor.

It sort of levels the playing field

The End?

[SomeOtherGuy]

From where I am standing I see many more PDA devices running PalmOS. Microsoft may have the marketing power to create the illusion that they have big market share, but in reality any other company would be dead if it was based on moving an OS. The competition here has to be on PocketPC Vs. PalmOS Vs. ???. (Because for one thing Microsoft does not provide any hardware to run their PocketPC OS on). In reality I would bet that their are 50 PalmOS related devices sold for every 1 CE/PocketPC device.

Now do I think that Palm is slacking in their Hardware provisions and enhancments....Hell yes I do...But they are the AOL of the PDA world -- and it wont matter how many bells and whistles they have to compete with -- they still will be the king of the hill.

Makes sense for the markets, less for business

[Zeinfeld]

The stock market analysts love a software revenue model, the marginal cost of production is close to zero so when software companies grow their margins grow faster than their revenues. Hardware companies on the other hand usually have fixed margins which often erode over time. Microsoft has been king of the software hill for 20 years, in that time the lead hardware manufacturer has changed from Comodore/Apple to IBM, to Compaq, to Dell and is likely to shift again in the future.

The problem for Palm is that their hardware business has a stronger consumer presence than their software. They also appear to have been asleep at the wheel for some time, while Microsoft was busy reinventing the PDA, Palm have not done anything of note since the Palm VII which is still as big and bulky as ever.

Palm are in a hole because Microsoft are producing a pocket computer while Palm are producing a single purpose appliance.

The problem with a Palm is that is appeals to the same people who used their Filofaxes in the 1980s, those obnoxious organized people who can actually remember to charge the damn thing each night. The Palm VII could have been the answer - a PDA and comunicator in one. Unfortunately using a Palm VII is a bit like using a dual boot Linux/Windows PC. It can play Tombraider, or it can run Gnome but not both at once. Same with the Palm VII, it can download email from Palm net, but it does not integrate seamlessly into my corporate mail system, not without some plugin in the sever my IT dept would never install.

The pocket PC on the other hand is not just a PDA, it has Word and Excell and Outlook. It also has an MP3 player that looks pretty solidly aimed at the consumer market.

So OK at the moment there are relatively few consumers with $500 to spend on a pocket PC, but within a year that price will be $300 and the year after $200. There are an awful lot more consumers interested in a consumer gadget than are interested in a cheap PDA.

OK so you can buy lots of software to make a Palm do the same as a PocketPC - only no MP3 output as there is no audio output. The problem is that by the time you do that you have spent more than you would for the PocketPC and you have a processor that is a third the speed and a third the amount of RAM.

The problem for Palm Software is that they have to quickly get to the point where they can make their platform as a package match Pocket PC. They may be able to buy in some software from third parties and bundle. As things stand they are playing Lotus 123 to Microsoft Office.