Palm Split Wont Be Simple

Company's plan to break into two business subsidiaries has potential conflict among software initiatives.

Palm Inc.s plan to divide the company into two distinct and specialized business units for better focus—one for the operating system and another for hardware—could actually create more confusion.

At the heart of the conflict is the issue of software development and support. The split, set to take effect later this year, places corporate developer programs under Palms software subsidiary. At the same time, however, the hardware subsidiary is gearing up to sell hardware and prepackaged third-party software to enterprise customers.

"Customers highest level of frustration has to do with having to deal with multiple players," said Michael Steinberg, president of the New England Palm Users Group, in Cambridge, Mass., whose corporate background is in business-to-business sales. "Most major customers like to have a major point of contact."

Nevertheless, Palm officials, in Santa Clara, Calif., are sticking by the new alignment, and both subsidiaries have new programs in the works, officials said.

On the operating system side, Palm is looking to cater to developers in large corporations that design company-specific Palm applications for their employees. "Theyre not interested in power-app marketing," said Gabriel Acosta-Lopez, who heads Palms developer community. "The enterprise folks are more interested in training, so theyll receive discounts on training. And theyre also interested in consulting services."

Palm also has plans for consulting services that should launch in six to 12 months, which comes as troubling news to current business partners that already offer such services, said Acosta-Lopez.

"I think thats a mistake," said Fran Rabuck, practice leader for mobile computing at Alliance Consulting, in Philadelphia, and an eWeek Corporate Partner. Alliance partners with Palm to help corporations mobilize their employees. "They have always touted the Palm economy, but if they take a slice out of that, the loyalty factor starts to slip away."

Steinberg said developers would likely welcome such services. "Developers have been frustrated with the lack of support," he said. "Palm is trying to change that."

In the past, Palms enterprise efforts have been focused on partnering with Fortune 100 technology companies that serve enterprise users and co-marketing hardware and prepackaged software with them. While the software group is parting with that model, Palms Enterprise Business Development Group, which will fall into the hardware subsidiary, appears to be sticking with it.

Last week, Palm announced a deal with customer relationship management software leader Siebel Systems Inc. in which both companies will sell software from Siebel that runs on devices that support Palm OS. Siebel Sales Handheld 7 is the mobile version of Siebel Sales 7, a Web-enabled sales force automation application used for such tasks as managing contacts, tracking deals and forecasting sales. The software will be available in the first quarter of next year, officials said.

Palm will market the software. Service and support will come mainly from Siebel, said Laurie Wood, director of Palms Enterprise Business Development Group. But Wood added Palm needs to be able to provide support for third-party software it sells, too. "My team often raises their eyebrows when I tell them this, but they are responsible for [a products] full life cycle," she said.

This has meant working with the software side of the company to gain expertise. This may not be as easy to do when the company splits into two subsidiaries; the operating system side cant favor one licensee over another, and that includes the Palm hardware subsidiary, officials said. But Wood said she still hopes to work closely with the operating system developers in the future.

"One of our greatest support elements of this company has been [Acosta-Lopezs] team," she said. "My team doesnt have the technical depth or the coding experience."