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Rudderless Palm splits with a flourish

Phlegm, Inc.

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Former PDA idol Palm Inc has spun off its software division Palm Soft - led by former AT&T research chief and Apple veteran David Nagel - which will now report earnings separately from the hardware business.

Less than ten per cent of Palm's overall business comes from software licensing, but it's been obliged to make the split after wealthier and more imaginative licensees (read: Sony and Handspring) chafed at having to pay good money for the privilege of not upstaging Palm's own lethargic hardware rollouts.

Palm announced the news not by issuing a press release or by briefing investor analysts, but by giving Nagel an exclusive briefing with a newswire last week, that gave the putative CEO a soap box from which he could throw a few barbs at Microsoft's rival PocketPC platform.

But it's easy pickings for The Beast, these days. Palm's neglect of R&D over recent years leaves it with only a low price and value for money as selling points, while Microsoft's licensees can boast about taking on real glitzy challenges, such as MP3 and MPEG playback, and telephony, and 802.11 wireless, and real handwriting recognition. (None of which PocketPC does particularly well, or even adequately, but at least to the watching the world it looks like it's trying.)

Palm's seen its phone partnerships disintegrate as its major partners (Motorola and Nokia) figured out they could do the PDA part quite well enough by themselves, thank you, and pulled out of joint ventures with Palm.

In fact, so badly had Palm neglected its engineering obligation under Yankowski, that only recently we were thinking of sponsoring a 'Black Hack Down'-style rescue mission to pluck the beleaguered engineers out of the Black Hole, feed them with pizza, and get them to fix our BSD router and this neat kernel-level MP3 streamer we've almost got completely figured out...

Nagel might well have used his soapbox to talk-up Palm software's future strategy. After Palm's panic decision to acquire Be's brilliant engineers he's obtained an embedded multimedia platform for a knockdown price, and this might well dictate where Palm goes next.

After Handspring's CEO Jeff Hawkins last week said that the company would no longer make standalone PDAs - all future Handsprings will be wireless communicators - Palm can either follow suit and become a cellphone provider, or go for something a bit more upscale, and aim to be the universal media playback device.

But either way it turns, it runs into the combination of Nokia and the Japanese consumer electronics giants, which've figured this one coming for quite some time. Nokia, for one, is morphing its high-end cellphones into cameras and "media phones", so we're not sure how much oxygen that leaves for a pure-play viewer.

More pressingly, we suggest, is management. Take a moment to run through Palm Inc's current executive team, here. Instead of the usual five or eight names, there are 21 executives trying to squeeze into the team photo. With many accomplished track records behind them, we don't doubt. But for example, what can a Chief Marketing Officer, a Chief Strategy Officer and a Chief Competitive Officer (the ludicrous Michael Mace, who turns up at rival developer conferences under an assumed name, and then denies that he's Michael Mace)* do that one can't person can't? Except argue a lot, that is.

If Palm's got a future, it needs to tell us what it is. And then take an axe to this great, bloated Apple reunion party, if only to show that it believes it itself. ®

* Michael Mace replies

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