Palm sorts source code, but is it too late?

Angus Kidman
Friday, 08 December 2006 05:15

Your IT - Mobility

Palm has scored itself a perpetual licence for the operating system it uses on most of its devices, but market share figures suggest it will need rather more than that to regain any momentum in the competitive mobile device space.

Following its split into two divisions, Palm to produce hardware and PalmSource to maintain and develop its Palm OS mobile operating system, and the subsequent sale of the latter to ACCESS Systems, Palm found itself in the unusual position of not directly having a license to the software which ran on the majority of its own equipment. While it now uses Windows Mobile on a number of smart phone models, Palm OS still remains important in many of its consumer lines.

Under a deal announced this week, Palm will pay ACCESS Systems $US44 million in return for a perpetual license which allows it to use Palm OS Garnet code in perpetuity, modify it as it sees fit, and even combine it with other operating systems if it wishes to.

While that might provide some useful certainty for shareholders and developers, a more pressing issue for Palm is regaining market share. Although it dominated the PDA (personal digital assistant) market in the late 1990s, the convergence of that functionality with mobile phones has seen competition get much tougher.

In the PDA market, Gartner estimates that Palm was ranked third in the most recent quarter, with a worldwide share of 10.3%. The segment is dominated by Research In Motion's BlackBerry, which claims 20.9% of all sales, while Danger's Sidekick accounts for 10.5%, just ahead of Palm.

"Palm continued to recede from the PDA market, primarily because it doesn't have a PDA model that incorporates cellular capabilities and its current line is aging," Gartner noted in its analysis.

Gartner's methodology distinguishes basic PDAs from smart phones, but the figures for the combined markets aren't much more encouraging. For the first half of 2006, Palm claimed just 5% of that global market, according to Gartner. Huge shipments for mobile phone-based products mean that segment was dominated by Nokia (42%).