September 25, 2000 6:05 AM PDT

Palm, Motorola to team on cell phone

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Palm and Motorola will jointly develop a cell phone based on the handheld computer maker's software, the companies are set to announce today, a boost to Palm's ongoing efforts to diversify its business.

As previously reported, Motorola and Palm will develop a so-called smart phone, with integrated personal digital assistant (PDA) software, wireless Internet access, and technology to synchronize data with a PC, the companies said. The co-branded phone will be released sometime in 2002 and sold through Motorola.

Many of the details of the product have yet to be worked out. It's unknown whether the phone will have a color screen, like the Palm IIIc, or use a stylus to input information, as most Palms do. The phone will be based on the next version of the Palm operating system, which does not yet have a release date.

Palm is trying to kill several birds with one stone in its partnership with Motorola. First, the project is another move by the company to wean itself off sales of Palm devices as its primary revenue stream. Further, the relationship with Motorola serves to remind competitors such as licensee Handspring, which is expected to announce its VisorPhone cell phone device today, that Palm is focusing on the wireless market with a vengeance.

"We're very committed to this space," said Mark Bercow, vice president of strategic alliances for Palm. "They're really different animals. The Handspring device is a different kind of device. Having said that, it's all based on the Palm OS, which I'm very happy about."

Microsoft, whose Pocket PC competes with Palm, has recently been demonstrating its smart phone, code-named Stinger, which is set to debut next year.

Interest in the smart phone as a means to access the Internet and keep track of email and contacts has intensified in the past year. This has happened as many come to realize that despite widespread interest in Web tablets, TV set-top boxes and other Internet appliances, the cell phone is the one device that millions of people already buy and use on a daily basis.

Palm is the unquestioned leader in the PDA market, with 60 percent of worldwide sales, but its success in the wireless market hasn't been as clear-cut.

The company's Palm VII wireless device was hailed because of its originality, but not for its ease of use or speedy delivery. It's unclear whether the new Motorola phone will access the Palm VII's Palm.net wireless service.

"We'll figure that out over time," Bercow said. "It has to do with the relationships with the carriers."

Palm's licensing relationship with cell phone maker Nokia has yet to yield any products, and Palm's early work with Qualcomm on the pdQ phone was criticized as being bulky and too expensive. Palm confirmed last week that Kyocera was acquiring the Qualcomm licensing agreement, in line with its acquisition of Qualcomm's cell phone business.

"The Qualcomm relationship was a straight licensing agreement," Bercow said. "This is a joint development effort, and the level of integration seen will be much tighter."

Motorola was a pre-IPO investor in Palm, which was spun off from networking giant 3Com as a public company earlier this year. The cell phone maker is part of the Symbian alliance, a group of cell phone makers including Ericsson and Nokia working to develop products similar to those Palm and Motorola are planning.

The arrangement is not a conflict, according to Motorola senior vice president Leif Soderberg. "This doesn't impact Symbian; we continue to have a relationship with Symbian," he said.

 

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