Palm Taps Nagel for OS Subsidiary

Palm Inc., which has been struggling with a decline in the handheld market and fierce competition from Compaq’s iPAQ Pocket PC line, moved a step closer to reshaping its Platform Solutions Group into an independent subsidiary Monday.

Palm tapped David C. Nagel, chief technology officer of AT&T Corp. and president of AT&T Labs, to serve as president of the Palm OS platform subsidiary. Nagel has served on the Palm board since February 2000.

“We can think of no one more qualified to shape our Platform Solutions Group into a highly competitive wholly owned subsidiary and
extend the success of the Palm Economy in the marketplace than Dave Nagel,” said Carl Yankowski, chief executive officer of Palm.
“His broad relevant background and technical acumen is well known, and he hits the ground running with a deep understanding of the
Palm OS, its strengths and its full potential.”

Nagel’s appointment is the latest is a series of moves by Palm in reaction to the rapidly changing face of the handheld market.
Overall handheld shipments slipped 21 percent worldwide in the second calendar quarter this year, according to a study released Aug.
6, by Gartner Dataquest. In addition to that, Palm saw its market share erode from slightly more than 50 percent in the first
quarter to just over 32 percent in the second quarter, according to the study. Meanwhile, Compaq vaulted over Handspring for second
place behind Palm. Compaq went from owning 7.8 percent of the market in the first quarter to have 16.1 percent worldwide market
share in the second. Handspring slipped from 15.9 percent to 10.7 percent market share.

Palm has reacted by attempting to strengthen its management, bring costs in line with business conditions, and refine its platform,
product and solutions portfolio. One of those moves is splitting the company into two independent arms, one focusing on hardware and
software, the other focusing on the OS and licensing.

“Palm’s plan to create two independent leading companies — one focused on platform software and licensing, the other on hardware
and software handheld solutions — takes another significant step forward with Dave Nagel at the helm of the future platform
software subsidiary,” said Eric Benhamou, chairman of Palm. “The platform company will operate in close partnership with all its
licensees, including the Solutions Group at Palm, its largest customer. The entire Palm board believes this appointment, plus the
other decisive moves Palm recently has made, significantly increases our potential to create shareholder value.”

Nagel, 56, will depart AT&T for Palm on Sept. 17. He will report to the Palm board until the new subsidiary is formed. Palm predicts
that will happen before the end of the calendar year. The new subsidiary is expected to have a separate board, and will operate as
an independent, though wholly-owned subsidiary of Palm. Nagel will continue to serve on Palm’s board.

“I’m delighted to lead the Palm platform business as it moves into its next phase,” Nagel said. “While it was very hard to leave
AT&T, the opportunity to lead the handheld industry’s leading software platform company is an excellent fit with my skills and
interests. I am excited about the potential to extend the reach of Palm’s platform as the mobile market expands into new areas, such
as wireless communications and multimedia, and as handheld computers gain ground as productivity solutions in the enterprise.”

Already some of Palm’s intentions in those areas are beginning to come clear. On July 24, Palm extended its licensing program to
include ARM silicon suppliers — specifically Intel Corp. Motorola and Texas Instruments — allowing those companies to offer device
manufacturers platforms that are already optimized for development of Palm OS-based devices.

More recently, Palm announced that it will acquire assets of Be Inc., including its staff. Be is known for its BeIA embedded
operating system, and Palm said it will use Be’s technology to augment its capability in development tools and user-centric
communications, Internet and multimedia technologies.

Both those projects will fall under Nagel’s watch. But Nagel appears to be well-suited to the task. As CTO of AT&T, Nagel led its
technology strategy and R&D planning. As president of AT&T Labs, he was responsible for managing R&D for the company’s
next-generation Internet Protocol, data and managed services, and AT&T Business Services IT systems. He also served as CTO for
Concert, the global joint venture between AT&T and British Telecom.

Before joining AT&T, Nagel was senior vice president at Apple Computer, where he led the worldwide research and development group
responsible for Macintosh OS software, Macintosh hardware, imaging and other peripheral products. And before joining Apple in 1988,
Nagel was head of human factors at NASA’s Ames Research Center.

He also brings with him a number of government connections. He has served on a number of national and international advisory
committees, and was named to President Clinton’s first Advisory Committee on High Performance Computing, Communication, and the Next
Generation Internet in February 1997. He currently serves on the successor to that committee, President Bush’s PITAC (President’s
Information Technology Advisory Committee). Also, he was named to the Federal Communications Commission’s Technological Advisory
Council in April 1999.

In the private sector, Nagel is a member of the board of directors of Liberate Inc., ArcSoft and RespondTV.

He holds undergraduate and graduate degrees in engineering and a doctorate in experimental psychology, all from the University of
California, Los Angeles. He is also a member of the Board of Trustees of the UCLA Foundation.

Meanwhile, AT&T has tapped Hossein Eslambolchi, the chief engineer of AT&T’s Internet Protocol (IP) and packet networks, to replace Nagel as chief technology officer and president of AT&T Labs.

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