Palm to create OS subsidiary

Palm plans to announce later Friday that it is creating a separate subsidiary for its operating system business, sources have told CNET News.com.

The handheld company currently runs as a single operation that includes the units that develop hardware and the operating system.

Under its present structure, the OS business works closely with companies that license the operating system, handheld makers such as Sony, Handspring and HandEra.

At the same time, Palm's handheld device group competes with those companies. The impending move could ease some of that tension.

The decision to create a subsidiary is less dramatic than spinning off a unit, as 3Com did with Palm last year, but it could be a precursor to such a move.

Palm CEO Carl Yankowski previously has said that the company would split the two businesses when such a move was feasible.