Turmoil sparks concern for future of Palm camp

PalmSource chief executive David Nagel resigned in May and PalmOne announced it will change its name back to Palm, prompting fresh concern about the future of the handheld software platform.

Hardware developer PalmOne said that it had signed an agreement with PalmSource that will see it take control of the Palm brand. PalmOne will pay PalmSource $30m for the name and plans new products for the autumn.

PalmSource was split off from Palm in 2002 to focus on software development but major licensee Sony has now left the camp and PalmOne continues to dominate financially.

Some observers are now questioning whether PalmSource is moving away from the Palm OS and towards Linux after the firm acquired China MobileSoft last year, including its mFone Linux-based platform.

"Palm looks like it is always in transition towards something that has never materialised," said Roberta Cozza of analyst Gartner. "Cobalt [the latest Palm OS released last year] has not generated any number of licences and PalmSource is very reliant on one licensee, PalmOne, which is currently looking at a move towards smartphones. Something has to change."

PalmSource faces competition from Microsoft, Research In Motion and Symbian and may need a radical overhaul. Demand for Palm-based products is declining. In the first quarter of 2005, sales fell 30 percent year on year.