PalmSource Sold to Japanese Firm

PalmSource is set to be acquired by Tokyo-based Access for $324 million. The companies said the deal is expected to close by the end of 2005.

Access is a mobile technology company that has the aim of “enabling Internet access anywhere and on any device.” PalmSource is the firm that develops the once-dominant Palm OS that run on PDAs and other mobile devices.

“By combining ACCESS’ robust NetFront browser platform and its proven business relationships with PalmSource’s advanced operating system, application portfolio, user interface and developer communities, we will be able to produce a comprehensive yet flexible solution for the mobile market,” said Toru Arakawa, CEO of ACCESS, in a statement.

PalmSource is the half of the company that was created in October of 2003 when Palm split into two separate units. PalmOne was focused on hardware and PalmSource was responsible for the OS. In May of this year PalmOne changed its name back to Palm Inc and bought the rights to Palm name back from PalmSource for $30 million.

Speculation over the buyout of PalmSource by a Japanese firm has existing for several years, though the originally the speculation revolved around Sony. Back in March of 2003, then PalmSource CEO David Nagel told that speculation about the outright purchase of PalmSource by Sony was unlikely.

Nagel stepped down as CEO in May of this year. Sony has now exited the PDA business itself as well.

Palm OS was once the dominant PDA OS. No longer. It continues to lose share by each passing quarter. According to second quarter 2005 data from Gartner, shipments of Palm OS-enabled devices now represent a 19 percent share of the PDA market, a dramatic shift from the 42 percent share it held of all PDA operating systems in 2004. Palm OS has lost share to Microsoft, which held a 46 percent market share in Q2 according to Gartner, followed by RIM, whose popular BlackBerry devices have helped it take a 23 percent market share.

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