PalmSource Swimming With Sharks?
By Carlo Longino, Fri Jun 04 15:45:00 GMT 2004

Sony's announcement earlier this week is a pretty significant strike against PalmSource, and one pundit says it hints at deeper troubles for the company.

David Haskin over at Mobile Pipeline says PalmSource is caught in between the PDA and smartphone markets, and the only place its clearly still ahead is the low-end PDA market. PalmSource has lost tons of market share at the high end to Pocket PC vendors, and though the Treo 600 is a media darling (and evidently the most popular smartphone in the US), Palm OS smartphones haven't made much of a dent in the wider market.

Haskin says Sony's decision was an easy one -- the company's declining share of a shrinking market had become less important than its stake in smartphone seller Sony Ericsson. The move really isn't that surprising, given the connected device sales numbers from earlier this week, where Sony Ericsson ranks a slot higher than its parent.

It really isn't surprising that the PDA market is moving towards smartphones, and anybody that couldn't see that coming should be in another business. But that doesn't mean that PalmSource (and even PalmOne) has handled the transition very well. While the Zire line of PDAs has reinvigorated the low end of the market and have been strong sellers, the number of Palm-based smartphones on the market remains low, especially in comparison to Microsoft-powered devices, given Palm's head start.

Some are saying that somebody needs to introduce a lower-cost Palm smartphone, but it seems more important that PalmSource find more handset manufacturers to license its OS for smartphones and connected devices -- and soon. While the low-end PDA market still shows signs of life, its days are numbered as smartphones and even featurephones take over PIM duties. Unless the Palm OS can find its way into more of these devices, it may find itself left on the sidelines.