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3Com Files to Spin Palm Division Off in IPO
It's been an ongoing story about 3Com and its PalmPilot division. The question, of course, has been what to do with it. Just a few months ago, we covered their original plan for spinning off the division, but now it looks like they are actually putting the plan in motion and we should see an IPO in about six months.
I bought a palm pilot a copule years ago and stopped using it after a few months of novel fun.
Still use the software for contacts on my box, but am wondering - are any of you out there total palm junkies, and do you find them very useful?
That kind of reminded me of Dr. Evil saying he was ransoming the world for, "One MILLION dollars!"
Are they just being humble? Unless the stock market comes to its senses in the next few months, I rather suspect they'll get a little more than $100 million (given absurdly high IPOs we've been seeing)!
Dana
They're not going to make as much as, say, VA Linux or Amazon, because they actually sell something, and they're actually a real business. So, odds are the IPO will flop.
Personally, I find the amazing thing is that they didn't spin off the palm into a new company ages ago.
3Com's big name is in networking... no matter what else they do, they continue to be a network equipment supplier. The Palm, on the other hand, has little to do with 3com's popular image. In fact, some people probably are unaware of anything else 3com does... just work on the Palm.
By splitting the Palm away from the 3com name, the Palm is left to survive, and thrive, on it's own. The Palm doesn't have a huge impact on 3com's stock, because it is a side game. However, a company dedicated to producing the Palm would probably perform wonders in it's IPO... because the Palm is popular, works well, and generally has a name already.
Disclaimer: Hey, I could be wrong - I'm a geek, not a market analyst. Technically speaking, I'm way out of my depth.
All operating systems suck. Some just suck less than others. (and some are virtual black holes)
So let me get this straight:
IPOs are typically used to obtain working capital for business development. But the Palm series is already popular and profitable.
Does this sound screwy to anyone besides me?
Schwab
Editor, A1-AAA AmeriCaptions
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Clearly, it's the leading player in the handheld category of devices, and clearly handhelds are where a lot of action will be for the next few years. But equally, handhelds need to be wired, tethered, and tied to existing platforms for awhile to take advantage of the vast networks of data which already exist.
By being independent, PalmPilot would be free to make alliances all over the place. A company like Compaq, for instance, might not "deal" with IBM as readily as they would with an independent. However, an independent will have problems growing quickly enough to cover all of the opportunities. Here lies the strength of a company like IBM having a division like PalmPilot. Think what the Apple Macintosh might have done had it been an IBM product in the early 80's!
There may not actually be a way for one player to capture the lion's share of the economic value of this market. Go it alone and you risk being the VCR Beta or the Mac, while turning it into the industry standard like VHS means you are just one of many players. Of course, the Microsoft story shows that it can be done, but I'd think that would be hard to pull off in this market. Back when MS was creating its monopoly, reverse engineering and cloning the PC seemed daunting, but not today. Plus, competitors are much more wary given what Microsoft did. Opensourcing it would be VERY cool... for the customers. Hard to recommend it to 3Com with a totally straight face as it would open them up to shareholder lawsuits.
Anyway, it doesn't make sense as a division of 3Com, no synergies at all with the sales force, channels, customers, etc. So, how should they dispose of it? They undoubtedly have had an eye on some of the wild IPOs lately and figure that's the best way to get the most money out of it now (watch: they'll tout it as a linux pure-play! :) which might make a pile of dough for them but won't necessarily yield the most successful outcome for the platform.
Very exciting time for the industry, though.
This shows us a clear direction where mobile computing is now headed to: There will be a fierce fight between WinCE and Palm camps over dominance in handheld WAP handsets or, later in the future (not many years more, anyway), powerful handheld mobile Internet-enabled computers.
No one will be using their cell phone only for talking in ten years (+-5 years, depends on when the 3rd Generation UMTS cell phones start appearing on consumer market) AND no one will be using their Palm X disconnected at that time.
I'm not sure what effect Apple ownership would have on overall innovation. Apple tends to be ahead of the curve on some things, but can also be behind on other things. They tend to burn their bridges when they switch technologies, though, hence my comment above about legacy support.
Jon
All opinions expressed herein are my own, and not those of my employers, who are appalled.
It's also my understanding that there was (is?) a large brain-drain going on, as Palm lost a lot of its really good people to Handspring. (Ironic, given that Hawkins and Dubinsky left Palm in '98 to form Handspring after 3Com refused to let them spin off Palm.) Palm may be hoping that the results of an IPO will enable them to afford to keep (and hire) good employees.
Another factor is that 3Com stands to make quite a bit more money by spinning Palm off. As a division of 3Com, Palm's affect on the stock price was negligible. Great announcements like the recent deals with Sony and Nokia barely nudged 3Com's stock valuation. If Palm were standalone, the effect on the stock price from such announcements would have been much more dramatic.
It's not as if 3Com is just cutting Palm loose. They'll get a fairly huge amount of shares in the new Palm and stand to make quite a bit of change off of Palm's efforts.
Palm also gets more freedom and "maneouverablility" not living under the 3Com roof. They're not limited to who they can deal with. For instance, it wouldn't look good if Palm - a division of 3Com - were to suddenly write wireless network software to run on Cisco hardware. Strategic decisions don't have to be run past as many committees and managers who may not be as "in tune" with Palm's needs and situations.
All in all, I think it's a Good Thing(tm) for everyone involved.
Palm is banking on their OS being the big seller for the embedded device market, vs selling hardware.. Handspring, IBM, Symbol, TRG, Qualcomm are but a few of the hardware manufacturers that license the Palm OS. With agreements with companies like Nokia and Sony to boot, they are in a very good position for the budding, soon to explode embedded device/wearable PC market.
Sure a PDA is cool and all, but thats not the Killer App. An easy to use, crash proof(mostly), fast, cheap, handheld window to the infinite resources of the internet.. now thats utility. And I dont really need Windows/Linux/MacOS or any other full figured operating system to accomplish this. Granted there will always be some wonderful open sourcers that shrink a kernel down, but IMHO Palm OS will most likely be the OS thats running on such a device.
They pretty much have it in the palm VII's (all but the cheap part) I use my wireless palm to read slashdot on the bus to work everyday, check my email, etc. My boss uses his to unlock his car when he locks the keys in (using the infrared port). The value of these devices cant be understated. There is just too many possiblities.
The whole IPO craze is definitely a little disturbing, brought about because everybody wishes that they had bought some cisco 5 years ago, but IMHO you'll probably wish you had some Palm stock 5 years from now...