September 9, 2005 12:38 PM PDT

PalmSource sale won't kill Palm OS

The sale of PalmSource may consummate the marriage of Linux and the Palm OS, but it won't kill off the operating system that helped create the PDA market.

Executives of Japan's Access said the company's $324.3 million proposal, announced Friday, would not have an immediate impact on the more than 39 million Palm-powered devices made by Palm and more than 40 other manufacturers, including Japan's Sony and Kyocera, and South Korea's Samsung Electronics.

"The existing deployments of Palm OS, including Palm OS Garnet, will continuously be supported," an Access representative said. "The purpose of the agreement is to maximize the synergy between the two companies. We really don't expect any changes in the relationships that we have with licensees."

Access said it wants to finish creating the Linux-Palm operating system hybrid that PalmSource started when it finalized its acquisition of China MobileSoft this year. The company gave no time frame for completing the work.

"They will preserve as much as they can, but it is a larger task than most people realize," Gartner analyst Todd Kort said. "That is why PalmSource said it would take 18 to 24 months to finish the project. It was their main focus for 2005."

Eventually, Access said its plan is to combine its Linux-based NetFront browser with the Palm OS version 5x--also known as Garnet. The representative said Access may even revisit the Palm OS version 6, known as Cobalt, which was not broadly licensed by PalmSource.

In a short statement, Palm president and CEO Ed Colligan stated support for the acquisition, but Palm's allegiance to the Palm OS is already waning. Palm Chief Financial Officer Andrew Brown recently told CNET News.com that building a Treo smart phone that runs on the latest mobile version of Windows might help the company woo corporate customers who have been reluctant to buy its Palm OS-based gadgets.

"The mere notion that a Palm device could be built around anything but the Palm OS means that the market is shifting and that anything is possible," said JupiterResearch analyst Michael Gartenberg.

PalmSource touts a mobile application developer community of approximately 400,000. That number is expected to rise as the operating system incorporates more Linux code.

"It's probably no coincidence that an Asian company has bought PalmSource, given its new allegiance to Linux," said IDC analyst Kevin Burden.

The popularity of Linux is particularly strong in Asia.

The Access deal also provides PalmSource with the help it needed, according to analysts, who note that the Palm spinoff has been struggling to win new licensees in the face of increased competition from Microsoft and Symbian.

PalmSource sold all Palm brand rights to Palm, formerly PalmOne, in May for $26.7 million.

 

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