Palm Solutions Group Future Hard to Read

Palm recently announced that it had finished forming a separate, mobile operating system entity called Palm Solutions Group. And although the corporate structure intended to market and develop Palm OS is complete, its not clear how this venture will fare.

Im sure Palm will welcome a change from the ever-shrinking margins of the hardware business to the greener grass of a software-only model, but its not yet clear whether the upcoming Palm OS 5.0 will be the franchise player that Palm is hoping for.

Palm built its business on simple, low-priced organizers and has always dismissed its competitors as too complex and encumbered by bloated, desktop-inherited code.

And yet Palm is picking through the remains of defunct desktop operating system company Be for multimedia special sauce and is dropping its signature 16-bit Dragonball-based platform for a 32-bit ARM-based one in line with those of competing systems Windows CE, Symbian OS and Linux.

Granted, the excellent BeOS is no ancestor to be ashamed of, but will the new ARM-based operating system that Palm has promised to deliver sometime this year have what it takes to make it? The refusal of Microsoft, Symbian and the Linux community to stay out of Palms sandbox will make it difficult for Palm to maintain its hegemony in the handheld space.

In a market softened by Palms hardware liquidation and threatened by low-cost, Linux-based organizers of the future, makers of Palm OS devices have found it necessary to differentiate their higher-end devices by adding more features.

Research In Motions BlackBerry has emerged from pager-world obscurity to become the handheld of choice for a fast-growing group of mobile device users. Handsprings Treo communicator (reviewed online at www.eweek.com/links) and Palms expected i705 wireless PDA suggest that Palm OS vendors get the message—these are products that stand to take off as availability of 2.5G-bps wireless network services spread.

Try as it might to stoke interest in its operating system group moving forward, Palm may find that slick, wireless hardware devices are what it will take to keep the company afloat.

Technical Analyst Jason Brooks can be reached at jason_brooks@ziffdavis.com.