The Palm Name Game

UPDATED: It’s back to the future for palmOne , which will change its name to Palm, Inc., later this year after buying the rights to the name from PalmSource , officials announced Tuesday.

PalmOne will pay $30 million over the next three-and-a-half years to PalmSource, developers of the Palm operating system, for its 55 percent stake in the Palm Trademark Holding Company.

As part of the deal, palmOne has agreed to let PalmSource keep certain Palm trademarks for the company and its licensees for the next four years. Maureen O’Connell, a PalmSource spokeswoman, said the company has not yet disclosed its plans for the Palm name after the four years are up, but are working on it.

According to Marlene Somsak, a palmOne spokeswoman, full control of the Palm name has been the company’s plans since PalmSource first split from the company in October 2003 and took with it a majority stake in the trademark.

“The Palm brand has just significant customer loyalty and aided and unaided awareness in mobile computing,” she said. “We believe that by owning it outright, we’ll be able to invest in it appropriately to keep it strong and to build it, so we’re really excited about it.”

Additional plans for the brand will be announced this summer, Somsak said, to go along with the name change. She’s fairly certain palmOne’s internal marketing team will work again with San Francisco- and London-based Turner Duckworth on a new logo and colors for the redesigned Palm image.

Officials will also look at whether they want to change their NASDAQ ticker from PLMO, which the company got when it split from PalmSource and acquired Handspring.

Todd Kort, a principal analyst at research firm Gartner, said the $30 million payout sounds more like a gift to PalmSource, which is in pretty desperate financial condition right now, to get the company through the current crisis and points to a growing schism between the two companies.

He said it’s likely palmOne will begin to work more closely with Microsoft and its mobile operating system and is confident we’ll see a Microsoft OS version of the Treo, which already supports Exchange Server out of the box on the Treo 650.

It’s telling, he notes, that palmOne decided not to ship a Cobalt-based device. Instead, Kort said, palmOne released its 4 GB-sized LifeDrive Mobile Manager under Garnet even though the device is more suited to Cobalt. The Treo 600 and Treo 650 both use versions of Garnet.

“PalmSource should have been listening to what palmOne wanted them to do, because [palmOne] was their largest licensee, so I put more of the blame in PalmSource’s court,” he said.

Both palmOne and PalmSource have been repositioning themselves in recent months to meet a challenge to a market it once owned in PDAs . The rise of the smartphone, as well as Microsoft’s CE operating system and Research in Motion’s BlackBerry, have cut into the market share of the house that Palm built.

The companies have recently gone through some C-level shakeups.

In January 2005, PalmOne CEO Todd Bradley resigned and was later replaced by Ed Colligan; just yesterday David Nagel, PalmSource president, CEO and director, stepped down from his position at the mobile OS developer.

Kort said palmOne could fare pretty well if it can gain 3 percent to 4 percent market share on its rivals in smartphones, but PalmSource has been lagging behind in development when it comes to both PDAs and smartphones.

“They’ve kinda tried to play both things and haven’t really done either one very well,” he said. “Cobalt was released to licensees more than a year ago, and no one has picked it up yet and I’m sure that’s the major reason for David Nagel no longer being the CEO.”

PalmSource’s O’Connell said the company doesn’t comment on its licensees’ product plans and so won’t comment on Kort’s contention that there are no Cobalt licensees.

“Todd [Kort] is certainly welcome to his opinion,” she said.

In related news palmOne extended its operating license agreement with PalmSource for another four years. The agreement calls for PalmSource to receive minimum royalty payments of $148.5 million, which includes $65 million in calendar years 2007 to 2009, subject to development milestones.

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