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May 26, 2005
Why Palm's Future Looks Bright
Tales of the demise of Palm, sometimes referring to PalmSource (the OS company) or PalmOne (the hardware maker) or both, seem to crop up in batches every once in a while, yet there's rarely ever any significant reason for the speculation.
One of the persistent rumors that has been hanging around since some comments from a PalmOne exec last year about possibly releasing devices based on operating systems other than Palm OS. My best guess on the situation, based on the latest information and news, is that there won't be a non-Palm OS device from PalmOne for at least three years, if ever.
First, PalmSource has agreed to sell the name "Palm" back to PalmOne for $30 million. That means that PalmOne will go back to being called Palm and PalmSource will be renamed to something that doesn't include "Palm" in the name (in fact, Palm OS will have to be renamed as well). That suggests that PalmOne believes there is huge brand value in the Palm name -- at least $30 million worth -- and a non-Palm OS device being sold under the Palm brand would be incredibly confusing and deleterious to the value of that brand.
Second, PalmOne has renewed its long-term licensing agreement with PalmSource. In that deal, PalmSource will get minimum royalty payments of nearly $150 million over the next four years, including $65 million for 2007 through 2009 if PalmSource meets certain development milestones. That is no trivial agreement, and really cements a commitment to Palm OS on the part of PalmOne. There is no reason they would have bought such a long-term relationship with Palm OS if they were looking around. To make a bad analogy, giving someone a key to your apartment usually doesn't happen if you're thinking at the time "we should see other people."
These two issues suggest to me that PalmOne won't be coming out with devices that don't run Palm OS for a long time, if ever. As Palm OS evolves into Palm OS for Linux, which will be happening over the next 12-18 months, the value proposition for PalmOne (and for PalmOne's customers) becomes even more compelling, so I don't expect significant changes to these reasons any time soon.
Here at the PalmSource DevCon, there's an air of enthusiasm and optimism that, frankly, I haven't sensed since the early days of the PalmPilot (mid-late 1990s). With the recent management changes and the switch to Linux and the increasing success of the Treo smartphone, people generally feel optimistic that Palm OS is well-positioned to be an even bigger and more significant player in the mobile market moving into the future. Before I came to PalmSource and heard all the announcements and saw the demos, I was in a bit of a funk -- I really didn't have a lot of confidence in Palm OS' ability to survive to the end of the decade. Now, I'm not only confident it'll be around, I think that its future is as bright as it could possibly be.
Regardless of your preference of mobile operating system (even if you have one), you have to admit that it's good for everyone to have competition in the market -- this forces innovation and evolution at a far faster pace than if there's just one player (the lack of improvement in Internet Explorer over the past 4 years, and then Firefox's pressure for Microsoft to increase IE's functionality and robustness, is clear evidence of this). So, root for Palm OS (and Palm OS for Linux) even if it's only to make your own preferred mobile OS adapt and improve faster than it otherwise would.
Posted by Craig in Industry
and Mobile & PDAs
Comments
What a difference a year makes:
Treo700w (windows os) has been released for over 6 mos and Palm has said it will stop paying royalties on the Palm OS beginning 07.
PalmSource is now owned by Access.
Forget Palm, they've gone to the dark side, what is going to happen with the OS?
Posted by: Palm user at August 21, 2006 2:44 PM