PalmSource Sheds Staff for Split

PalmSource, which maintains the operating system side of Palm , confirmed Friday that it laid off as much as 18 percent of its staff this week.

The Sunnyvale, Calif.-based subsidiary declined to comment on the layoffs, but did say it is in the middle of preparations to split off from its parent company later this year.

“This is part of our constant effort to re-evaluate our employee force,” PalmSource spokeswoman Gabi Schindler told the San Jose Mercury News. “It was basically across the board.”

Recent estimates suggest Palm has about 1,171 employees tucked under its roof after some 250 people were let go in the last four months. Neither Palm nor PalmSource would confirm an exact headcount.

The planned separation has garnered some enthusiasm from PDA vendors including Handspring , Sony , and HandEra as well as Palm’s Solutions Group. Sony even went a step further and agreed to make a $20 million investment in PalmSource.

After completing the church-and-state split, Palm says it will also launch an advisory council of Palm OS licensees to consult and communicate with the Platform Group.

In the next three months, PalmSource is banking on some new contracts to boost its sales and market share including Fossil’s Wrist PDA with Palm OS, Garmin’s iQue 3600 GPS-enabled handheld, the Legend Pam168 Chinese-language handheld, and the Sony Clie NZ90 with a two megapixel camera.

But while the Palm OS still dominates the handheld market, other operating systems are gaining in market share.

In November 2002, International Data Corp. (IDC) said that a survey of about 1,000 members of its Mobile Advisory Council showed the Palm OS remained entrenched in the healthcare, education and government vertical markets, but Microsoft’s Windows CE/Pocket PC is now the preferred platform for mobility solutions within field sales/service and utilities segments.

Palm says it managed to hold onto the 80 percent share it boasted during the December 2001 holiday period, according to retail sales figures compiled by NPD Intelect in December 2002. Palm hailed that result, noting that the 2002 holiday season saw the introduction of lower-priced handhelds and increased promotional spending by licensees of rival operating systems.

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