PalmSource, the mobile OS company, on Wednesday announced its acquisition of China MobileSoft, which it described as one of Chinas leading suppliers of operating systems and apps for cellular handsets.
This is a stellar deal for PalmSource because it opens markets that the company had been unable to crack while reversing PalmSources potential for a slide into insignificance.
CMS supplies the operating system and basic apps for 31 wireless devices from 10 Chinese manufacturers. It also offers a suite of more than a dozen other mobile applications, all of which are at least potentially cross-platform. These tremendously increase the breadth of PalmSources offerings.
China MobileSoft is also a Linux company, and its that aspect of the deal thats gotten the most attention in some circles. Its not the most important angle, but things such as opening major new markets and moving the Palm interface onto phones in all price ranges arent nearly as exciting. Unless youre a shareholder, I suppose.
So, Ill begin with the Linux angle:
CMS has been developing its own version of Linux, optimized for mobile devices. The plan is to layer the Palm OS look, feel and applications compatibility atop the CMS mobile Linux.
Its not clear what that buys you today, but it gives PalmSource new options for selling its products onto a potentially wider range of hardware platforms in the future.
Im not sure how much of a future Linux has on devices that have traditionally relied on embedded, proprietary operating systems. But if it has a future, PalmSource is now positioned to be a significant part of it.
More importantly and in the here and now, CMS will build versions of its mobile phone OS kernel that have the look and feel of Palm OS and include its address book and calendar.
This is a big win for PalmSource because it opens the vast market for low-end and midrange wireless devices to its user interface and products. This will start in China but quickly will be offered in other languages for other markets.
Next Page: What the low-end phones wont do.
-End Limitations”> What the low-end phones wont do, however, is run third-party Palm applications. This is a requirement of many current PalmOS users, but doesnt mean a thing to the vast majority of cellular customers.
Whether the Palm UI and basic apps will mean anything to them is hard to say, but at least now the question is on the table—something PalmSource had thus far been unable to achieve.
The deal also makes PalmSource a significant player in the growing domestic Chinese market. Because PalmSource is buying a holding company which in turn owns CMS, the acquisition will remain “Chinese-owned” for the purpose of preferential treatment by the Beijing government. PalmSource considers this a major benefit of how the purchase was structured. It also gets 150 CMS engineers, nearly doubling its engineering staff.
Like Ive said, this is a stellar deal for PalmSource. Not because of the Linux sideshow, but because it makes the company a bigger player on the global stage. While PalmOS is well-known in the United States and elsewhere as a PDA platform, its penetration into wireless devices has been tiny.
The CMS acquisition immediately gives PalmSource a larger and better product line for its global OEM customers to choose from. No longer is PalmSource limited to the high-end devices necessary to meet the hardware requirements of its OS.
PalmSources acquisition of CMS isnt a big enough deal to catapult the company into global prominence, but it does provide a growth platform the company lacked. Where PalmSource had been a small fish in the global wireless market, it now has products spanning the full range of devices that customers demand.
PalmSource has decided it wants to play on a larger stage. I think itll do well.