To Be or Not to Be—That’s PalmSource’s Question

Palm OS developer PalmSource Inc. has announced the appointment of Jean-Louis Gassée as its Chairman of the Board. The former Apple executive and Be Inc. founder has been on PalmSource’s Board of Directors since 2002 and takes a spot vacated by Eric Benhamou, who recently announced his resignation.

The move comes at a crucial time for PalmSource, the operating system developer spun off from PalmOne last year. Once the dominant player in the Personal Digital Assistant (PDA) market, PalmSource has seen its influence drop as the market has diversified with offerings powered by software made by other companies. It’s a position Gassée has seen before, and hopefully he's learned from past mistakes and can offer PalmSource some sage wisdom going forward.

The PDA market has shifted its focus away from devices that serve as just repositories for calendars and address books to “smartphones” that combine the capabilities of a PDA with cellular telephony. That change has been dramatic enough that some companies have pulled up stakes in the regional North American PDA market all together, seeking greener pastures or, at the very least, a strategic retreat that will let them lick their wounds until they can figure out their next step.

PalmSource powers some of the better smartphones out there, but they're not the only choice—other operating systems and hardware platforms are vying for the hearts and minds of consumers. RIM’s Blackberry is the darling of corporate enterprises whose executives and traveling managers want constantly to stay in touch by e-mail. Nokia and Sony Ericsson smartphones powered by Symbian OS have been adopted by road warriors who don’t want to cut their umbilicus from the home office for even a moment, as well.

In that respect, the PDA industry is now a replay of personal computer market in the ’80s and ’90s, a show for which Jean-Louis Gassée had a front row seat as president of Apple’s Products Division and later as founder of Be. The company developed the BeBox and BeOS, an operating system ideally suited for multimedia applications like digital imaging and video. Some expected BeOS to be The Next Big Thing, at a time long before Apple’s Mac OS X operating system would see the light of day. Be was not to be, though: its assets were eventually bought by PalmSource progenitor Palm and the company was dissolved entirely. That’s what led Gassée to his current spot.

PalmSource’s own roots are intertwined with the Apple tree, as well. Palm Computing, the company that started it all, was already developing pen computing software when Apple’s Newton MessagePad hit the market in 1993. It wouldn’t be until 1996 that the first Pilot PDA would emerge, after Palm Computing received financing and manufacturing help from US Robotics. Apple shut down its own Newton project in 1998. By then, Apple had lost a lot of its PDA braintrust to Palm.

PalmSource suffered another setback recently when well-respected industry analyst Charles Wolf of Needham & Co. announced that it was all but a foregone conclusion that PalmOne—PalmSource's single biggest licensee—was developing a version of its Treo smartphone that used Microsoft’s Pocket PC operating system. Up to now, all of PalmOne’s devices, including Treos, have used Palm OS. Remember: before last year, PalmOne and PalmSource were a single company.

Wolf’s comments and corresponding downgraded outlook for PalmSource were enough to erode Wall Street’s low confidence even further. The stock hasn’t recovered since then, and the news of Gassée’s appointment apparently hasn’t bolstered investors’ opinions very much. PalmOne’s apparent defection from Palm OS loyality is more a psychological barrier for investors than anything: PalmSource’s operating system is still used throughout PalmOne’s product line and by many other licensees as well, although hardware makers have been slow to announce products that utilize PalmSource's vaunted Cobalt operating system—the newest version of which (v6.1) is said to be ideal for new smartphone hardware.

In announcing Gassée’s appointment, PalmSource CEO David Nagel said that the former Apple and Be exec knows the company, the product and the customers. Let’s hope that Nagel, Gassée and PalmSource’s board and senior management can figure out a plan that keeps this company center-stage in the evolving PDA/smartphone business. Otherwise, PalmSource may end up with an Apple-like niche in the very market it helped to forge.

Related:
  
Shop Tech Products at Amazon