Palm to Create Subsidiary for OS Business
Palm, Inc. has announced it will form a wholly owned subsidiary out of its Platform Solutions Group, which oversees the Palm OS and its licencing. This isn't exactly the same as splitting off the OS portion of the company from the hardware part, but it's close. The new subsidiary will still use Palm's buildings and some administrative staff.
A committee of the board of directors of Palm, chaired by David C. Nagel, will oversee the subsidiary's creation by the end of this year.
"We're eager to foster the independence of both of our businesses, and creating a separate subsidiary for our platform activities will allow us to bring greater clarity of mission, better serve licensees and, we believe, increase shareholder value longer term," said Carl Yankowski, Palm chief executive officer.
"This is another important step to strengthen our technology and deliver powerful and elegant solutions for our Palm OS licensees," said Alan Kessler, Palm general manager of the Platform Solutions Group. "We continue to build a large and powerful base of registered developers -- more than 170,000 of them -- with more than 10,000 commercially available applications. This is great news for the Palm Economy."
An Advisory Council of Palm OS licensees also will be formed to consult on the subsidiary's objectives and provide a direct channel for communication with the Platform Group.
This move is intended to deal with the problem of Palm Inc. both cooperating with its licensees and competing against them. Palm needs to work closely with the OS licensees, like Sony and Handspring, to improve the Palm OS but it also competes against them in hardware sales. Splitting off the portion of the company that develops the OS could greatly relieve some of the tension.
The reason the operating system portion isn't yet being fully spun off is it doesn't make enough money to support itself. While licensees pay Palm a fee for every handheld they sell, they don't pay enough to cover the amount Palm spends on developing the Palm OS.
This move doesn't come as a surprise. Palm's CEO said a few months ago that the company was considering splitting the OS portion of the company off.
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