Palm/Handspring offshoot perceived as strong wireless contender

Enterprise users and industry analysts see Palm's $169m acquisition of Handspring as a smart move that will result in a combined...

Enterprise users and industry analysts see Palm's $169m acquisition of Handspring as a smart move that will result in a combined company better able to compete in the mobile and wireless market.

Gail Browder, executive vice president for products and services at PHT in the US, which has fielded "tens of thousands of Palm devices" over the past year to support clinical trials it runs for drug companies, said the Palm/Handspring combination will result in "a bigger player" that is more competitive.

Browder added that bringing founder Jeff Hawkins back into the Palm fold will also help the company "stem the perception of brain drain" that occurred when he left to found Handspring. Hawkins, who is now Handspring's chairman and chief product officer, will be the chief technology officer of the merged company.

Browder added that in her view, Handspring - which has concentrated sales efforts on its Treo handheld with integrated wireless capabilities - will offer Palm expertise in building handhelds with integrated wireless.

Sam Bhavnani, an analyst at ARS, said Handspring will provide Palm with something it has sorely lacked: strong partnerships with major US cellular carriers.

Bhavnani said Handspring has partnerships to sell the Treo through three cellular carriers in the US: Cingular Wireless, Sprint PCS Group and the US T-Mobile division of Deutsche Telekom.

Palm, in contrast, has a sales and marketing partnership only with AT&T Wireless Services.

Bhavnani views Handspring's carrier relationships, which take time to build, as the most important intangible asset Handspring brings to the combined company.

Sprint spokesman Dan Wilkinsky described partnerships between device manufacturers and carriers as being "absolutely vital" because phone and handheld suppliers no longer develop products with the expectation that carriers will sell them.

Instead, carriers need to work with suppliers which can develop products that are "integrally woven" into a carrier's strategic plan. He described Handspring's Treo "as a real winner for us".

The combined company should be able to offer a broad line of products that are better able to compete with Microsoft's, Bhavnani said, especially since that company is "a little behind" in sales of its Smartphone.

Since the Treo combines voice and data into one device, the new Palm will also be in a better position to compete with mobile phone handset manufacturers, such as Nokia, which are now boosting the data capabilities of their phones.

IDC analyst Alex Slawsby said the Palm/Handspring deal indicated that the "handheld industry is no longer device-centric", but is now focused on companies that can deliver wireless capabilities.

While the combined company will have scale that the two partners now lack, Microsoft still holds the lead in the enterprise market, with its clear focus on enterprise users with products such as the Pocket PC, he said.

Bob Brewin writes for Computerworld

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