PalmSource Stumbles As Sony Exits

Posted By: demesa on Wednesday, June 02, 2004 2:05:32 PM

Shares of PalmSource took a dive on Tuesday as the news of the Sony's dropout spread on Wall Street. A article at thestreet.com looks at some of the influencing factors and results of the move.

The news of Sony's defection pulled PalmSource down $2.41, or 12%, to $17.84 in trading on Tuesday. The article mentions, at the end of the first quarter of 2004, preliminary data by market researcher Gartner showed the Palm OS with a market share of 40.7%, down from 49% a year earlier, while Microsoft's Windows CE's share has risen to 40.5% from 36.7%. Equally disturbing, the market for the devices that run on those operating systems is shrinking, says Gartner. Worldwide shipments of PDAs, slipped 4.6% in the quarter vs. year-ago levels.

The declining market for PDAs played a factor in Sony's decision, said Kelly Gaffney, a Sony spokeswoman. Gaffney left open the possibility that Sony will re-enter the PDA market in the U.S. and Europe at a later date. Sony may also develop future devices based on the PalmSource's software, she said

Sony contributed about 12% of the company's revenue on a trailing nine month basis, said David Limp, PalmSource's senior vice president for business development. Limp said the move by Sony came as no surprise, and to be fair, the company has publicly recognized the slowdown in its core market and said its future lies with the smart phone.

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The Gartner report was flawed

Rome @ 6/2/2004 3:08:07 PM #

Why wasn't the IDC report used instead of Gartner's? The Gartner report excludes the sale of Treo 600 while including Blackberry sales figures.

Typical Wall Street...

RE: The Gartner report was flawed

Token User @ 6/2/2004 3:15:09 PM #

Many Gartner studies are flawed ... but so are IDC. Unfortunately you pay more for a Gartner subscription (and to be included in a study), so the information MUST be right.

~ "Don't be too proud of this technological terror you've constructed." - DV ~

RE: The Gartner report was flawed

dsaroff @ 6/3/2004 11:48:08 AM #

Regarding Token User's comment that,

"you pay more for a Gartner subscription (and to be included in a study)", I wish to correct him on major error.

Gartner DOES NOT charge companies to be included in a Research study.

I work for Gartner and I know this for a fact. While I am often dubious ofour own research, especially that on PDAs, I know for a fact that Gartner takes impartiality seriously. If we charged companies to be in a study, our research would be absolutely suspect (and rightfully so).

RE: The Gartner report was flawed

Token User @ 6/4/2004 7:20:26 PM #

Hmmm. Interesting. I work for a company that is often ignored by Gartner in our vertical market space because we do not have a business relationship with Gartner ... despite that we are still a leader in our segment. It is true that you don't "pay" to be in a Gartner report, but they do look more favourably on companies that "buy their chickens from the right supplier".

Gartner == Research Mafia.

I am sure they are a great company to work for (looked into working for them in the past), and I am sure that you work for an ethical group (somewhere away from the marketing bods). Money talks.

~ "Don't be too proud of this technological terror you've constructed." - DV ~

Hello? Why is this different than the Betamax wars?

johnbartley @ 6/2/2004 6:05:01 PM #

Folks, chill.

Look at the way Sony does business. They either create a market (Betamax, Walkman) or enter with high-margin, well crafted products.

Sony bails or retrenches when a market segment becomes commoditized, and that's what PDAs are, right now; a commodity item. PalmSource has been talking a lot with China, and nobody can commoditize a product like China.

It is extremely wise of Sony to take a breath here, and then reconsider a few glitches; forex, shipping the BT-capable versions of the PEG T-55 to Europe and East Asia only. BT has hit critical mass here in the Statess; heck, if I can buy a PT Cruiser with BT, it has mainstreamed.

Sony's proprietary graphics made sense when they led the pack in resolution; now that Palm and other folks have half-VGA screens (480x320), the Sony-only programming required for special modes (e.g., landscape) is so yesterday it ain't even funny.

Convergence is the future, yet Sony's relationship with Ericsson for Symbian-OS cellphones has to be rethought, because the Euros are starting to realize a 'smartphone' which don't run PPC or PalmOS is a very dumb phone, indeed.

PalmOne is shipping every Treo600 they can make (and ain't we glad the build quality is back to only 1-2% defective!). Given the bad decisions Sony has made in this market, slowing down for the speed bump of their recent PDA market share drop shows someone upstairs at Sony has woken up to smell the green tea.

there is no war; Sony really tried

tompi @ 6/2/2004 9:06:03 PM #

Do you seriously believe that Sony wanted to do their own audio APIs, their own hi-res APIs, and their own Bluetooth utilities? They probably had to because Palm didn't include them in PalmOS in time for them to ship with these models, and it just seems to be a lot of work to switch over to the Palm APIs once Palm comes out with them. I suspect it is just this sort of thing that has caused Sony to stop shipping Clies in the US/Europe.

For example, the TH-55 doesn't include Palm's Bluetooth connection manager or the new Datebook/ToDo features of the T3, even though it came out long after the T3. The TH-55 can't even reliably make a connection with a Sony-Ericsson phone. Whose fault do you think that is? Do you think Sony doesn't want their customers to be able to connect to their phones? Or do you think that somehow the way Palm ships PalmOS made it impossible for them to include it in the TH-55? I think it's the latter.

What's "dumb" about it? Symbian has lots of software available for it, and friends of mine that have it (and have used Palm) love it.

My recent PDAs have been a Sony TG-50, a Tungsten T3, and a Sony TH-55. All of them have had serious software problems and limitations, all of them have crashed with regularity (and the T3 even developed a hardware problem within a couple of weeks). I've only stuck with Palm because it has been the lesser of two evils, but that's not a good long-term business proposition.

I think my next device is not going to be a Palm, no matter what. If Sony came out with a Symbian-based PDA, I'd buy it in a minute.

RE: Hello? Why is this different than the Betamax wars?

doctor__no @ 6/3/2004 12:04:03 AM #

ppl seem to forget that Sony has help create two of the most used formats ever, and have been very sucessful in that.

That being the much used 3.5" floppydisk which they introduced in 1980;

http://www.accurite.com/FloppyPrimer.html

And the CD-ROM (which they developed with Philips).

http://www.usbyte.com/common/compact_disk.htm

Basically format wars have historically came down to which electronic giant(usually Japanese) you want to pay your dues too. Be it VHS(JVC/Matsu****a) or Beta(Sony), or Memory Stick (Sony) or SD (Matsu****a/Toshiba/Sandisk).

RE: Hello? Why is this different than the Betamax wars?

SeldomVisitor @ 6/3/2004 6:25:26 AM #

> ...Treo600...(and ain't we glad the build quality
> is back to only 1-2% defective!)...

Says who?

Are ALL Treo 600 defective?

;-o @ 6/3/2004 8:35:22 AM #

He meant to say 10 - 20%. My experience was that closer to 30% of Treo 600 were "defective".

But it all depends on the individual what "defective" means. e.g. In terms of phone sound quality, in some ways they were all defective - cheap parts + poor design = tin can sound.

(It's not a bug. It's a FEATURE!)

You like me! You really like me!

RE: Hello? Why is this different than the Betamax wars?

a_nonamiss @ 6/3/2004 9:03:05 AM #

Hahaha...

Matsu****a

Nice contect filtering! Sorry - It's probably lack of sleep that makes that funny...

Arthur

Palm Pilot 1000 > Palm Pilot Professional > Palm III > Palm M100 > Sony Clié PEG-T415 > Palm T|T3

Future of Sony Handhelds

doctor__no @ 6/3/2004 12:37:04 AM #

While Sony seems to be holding short-term expansion of it's Clie in the US, it seems Sony has a slew of new mobiles coming out;

Including the U50 (1ghz, 20GB HDD, 512RAM, WinXP)
http://www.icube.us/Products/sonyux.htm

The P900:
http://www.mobileburn.com/review.jsp?Id=520

Vaio Pocket Video & HMP-A1
http://www.ehomeupgrade.com/archives/000388.php
http://www.gizmodo.com/archives/sonys-hmpa1-vaio-video-pocket-009970.php

Not to mention the PSP

IT would have been nice to see PalmSource get Sony to make a Palm version of the P900 for the US market. Guess that ain't happening now :(

J-Spec™ CLIES: they'll make you cry in 2004

;-(( @ 6/3/2004 3:13:47 AM #

It's a shame Sony pulls the plug just before they reached PDA perfection. As Alanis Morissette said in her song:

Isn't it ironic? Like a CLIE... on your wedding day. Like a free ride... when you're already late.

J-Spec™ CLIE + Sony Ericsson T608/T630 = the ultimate power user package in 2004.

Got J-Spec™?

Freedom of speech, baby. Gotta love it,

PalmSource stock being dumped by the boatload

;-(( @ 6/3/2004 5:05:17 AM #

http://finance.yahoo.com/q/hp?s=PSRC

Almost 2 million shares sold in the past 48 hours. (5 - 10 times the usual amount). I expect it will be closing for around $15 by the end of the week. PSRC for $10 - 12 may be a great buy that could double returns within a month or two. Very tempting. I'm surprised Seldom Visitor isn't here spreading FUD to try to drive the price down some more.

Freedom of speech, baby. Gotta love it,

David Nagel used to have 10 MILLION in PalmSource stock!

;-o @ 6/3/2004 8:51:15 AM #

http://finance.yahoo.com/q/mh?s=PSRC

Martha Stewart wants to know how much of that he's sold off recently...

You like me! You really like me!

RE: PalmSource stock being dumped by the boatload

;-o @ 6/3/2004 9:03:22 AM #

Nagel actually owns (owned?) 5% of PalmSource! Very slick, Davey. If only Sony had bought Palm outright he could have sold his shares for $30 a pop...

You like me! You really like me!

RE: PalmSource stock being dumped by the boatload

hoodoo @ 6/3/2004 10:44:17 AM #

ok all you face icon guys.

Don't forget for every seller there's a buyer, albeit at a lower price. Someone's buying the shares...I wonder who? Probably Ska.

RE: PalmSource stock being dumped by the boatload

Rome @ 6/3/2004 11:55:55 AM #

Face icons,

This is NOT the Yahoo Finance Board....take your stock comments elsewhere.

RE: PalmSource stock being dumped by the boatload

;-(( @ 6/4/2004 3:34:29 PM #

Don't forget for every seller there's a buyer, albeit at a lower price. Someone's buying the shares...I wonder who? Probably Ska.

Seldom Visitor and I will buy in once it hits $10 this month. Expect it to rebound briefly to $20, then nosedive to penny stock by the end of the year.

Freedom of speech, baby. Gotta love it,

And then there was one

mikecane @ 6/3/2004 8:55:58 AM #

palmOne and PalmSource re-merge by year's end. Why license when combined they can make zillions with the Treo? Jeff Hawkins to ascend to the throne again too?

Nagel is a CON ARTIST

Gekko @ 6/3/2004 9:49:49 AM #

http://www.palminfocenter.com/view_story.asp?ID=6117

RE: Nagel is ...

mikecane @ 6/3/2004 9:53:33 AM #

>>>He continues that there will be more "top-tier" Palm OS licensee soon. Nagel goes on to hint that he would consider another licensee, such as Samsung, talking a equity stake in the company, as Sony had done.

Soon it'll be like "Monty Python and the Holy Grail" -- a cart will come 'round with someone shouting, "Bring out your PalmOS dead!"

RE: Nagel is a CON ARTIST - one reason why Palm is broke

;-(( @ 6/4/2004 3:16:47 PM #

He deserves every dollar of those $11,000,000 in PalmSource stock he was given. I wonder how many outsourced support jobs could have been kept in the USA if Nagel hadn't been given that $11,000,000 bonus.

Palm could have paid 40 people $50,000 a year for the next 5 years with that money. What a pathetic waste. It's hard to feel sorry for Palm seeing the excesses that have gone on there. (Carl "The Truth" Yankowski: We're looking at you...)

Here's som more shocking info:

http://paycheck.demo.marklogic.com/company-execs.xqy?ticker=PLMO

Freedom of speech, baby. Gotta love it,

RE: Nagel is a CON ARTIST - one reason why Palm is broke

;-(( @ 6/4/2004 3:16:47 PM #

Here's some more shocking info:

http://paycheck.demo.marklogic.com/company-execs.xqy?ticker=PLMO

Freedom of speech, baby. Gotta love it,

RE: Nagel is a CON ARTIST

;-(( @ 6/4/2004 10:51:45 PM #

When Michael Mace leaves Palm he should make sure he hires whoever Nagel's lawyer is to negotiate his settlement. (What did Yankowski get? 2,000,000?)

Mace should then go to work with Sony Ericsson as they refine their smartphones. Too bad we won't be seeing a P900 running PalmOS any time soon.

It's been quite a run for Palm, but it's starting to look like the party's over. From nothing to a market cap more than 3Com and now going back to nothing again. All in less than 8 years. Shades of the movie, Startup.com

Freedom of speech, baby. Gotta love it,

Michael Mace: What next?

;-o @ 6/5/2004 1:47:09 PM #

Mike, where will you be moving on to now? We've always enjoyed your honest communications and it will be too bad to see you leave Palm. Please keep us updated with what you're doing in the industry. I hope you accept a position at Sony Ericsson and manage to convince them to revamp their smartphones.

You like me! You really like me!

Dell Axim X30 Handheld 312MHz

Gekko @ 6/3/2004 10:07:32 AM #

Dell Axim X30 Handheld 312MHz
$249 and you get 312MHz XScale, 64MB RAM, 64MB ROM, SD Slot, Wi-Fi AND Bluetooth built-in, Removable Battery, and new Windows Mobile.

http://www1.us.dell.com/content/products/compare.aspx/pda?c=us&l=en&s=dhs&cs=19&~ck=bt

http://www.brighthand.com/article/Dell_Axim_X30_Review?site=PPC

RE: Dell Axim X30 Handheld 312MHz

mikecane @ 6/3/2004 10:25:57 AM #

So what? It's still garbage!

Stop the recruiting. (Unless you've been savvy enough to get $$$$ out of Gates... or are you just dumb enough to do their work for FREE?)

RE: Dell Axim X30 Handheld 312MHz

Gekko @ 6/3/2004 10:50:37 AM #

Yes, Gates pays me a penny a post, you friggin goof.

RE: Dell Axim X30 Handheld 312MHz

mikecane @ 6/3/2004 11:10:28 AM #

>>>Yes, Gates pays me a penny a post, you friggin goof.

Geez, but you're overpaid! Shillboy.

RE: Dell Axim X30 Handheld 312MHz

Foo Fighter @ 6/4/2004 11:05:25 PM #

What? You're getting a whole penny? Bill only gives me .00034 of a cent per post. Time to renegotiate my contract.

-------------------------------
Contributing Editor, http://digitalmediathoughts.com
Editor, http://Pocketfactory.com

More on PDAs being dead

mikecane @ 6/3/2004 11:12:17 AM #

This excellent opinion piece at rohdesign makes sense now:

http://www.rohdesign.com/weblog/archives/000301.html

RE: More on PDAs being dead

Foo Fighter @ 6/3/2004 12:24:57 PM #

Mike Rohde...is that SuccessWizard?

-------------------------------
Contributing Editor, http://digitalmediathoughts.com
Editor, http://Pocketfactory.com

RE: More on PDAs being dead

rcartwright @ 6/4/2004 12:39:22 AM #

A good article to a point. The thing that all the "PC in a pack of cigarettes" folk seem to miss is that while you technically can make a PC that small, the input/output options are going to limit the useability. Short of "Star Trek" class voice imput/output you have to have a screen no bigger than say, a T3. You have to have either a thumbpad or handwritten imput (I am not considering the "virtual" keyboard out there as the harware to make it work frankly makes it more trouble than its worth IMHO) Say like a Palm T3. A net connection is key, again say like a T3. Well, the T3 is out there now and the T3 sized computer is vaporware. Which when you consider the powe and heat issues of a full PC that size might expalin why we do not dee them, they vaporize when they are turned on.

Life is a great adventure or nothing.

RE: More on PDAs being dead

mikecane @ 6/4/2004 1:45:52 PM #

Yeah -- and don't forget that T3 battery life. Just like -- an OQO's!

RE: More on PDAs being dead

rcartwright @ 6/4/2004 8:12:03 PM #

Argh! My English teacher would be shamed she ever taught me. One should never respond to posts after you have been up 16 hours.

Well at least you could understand it. Thanks to mike cane for not going after my grammer and spelling.

Life is a great adventure or nothing.

SEC to Charge 11 Former Symbol Execs with Fraud

Gekko @ 6/3/2004 11:43:42 AM #

More good news for PalmSource!

SEC to Charge 11 Former Symbol Execs with Fraud
NEW YORK (Reuters) - The U.S. Securities and Exchange Commission (news - web sites) said on Thursday it will charge 11 former Symbol Technologies Inc. (NYSE:SBL - news) executives with securities fraud, stemming from a probe of the company's accounting practices.

The maker of bar codes and handheld computers will pay $37 million in penalties to settle accounting and securities fraud charges, the SEC said in a statement.

http://story.news.yahoo.com/news?tmpl=story&cid=569&ncid=738&e=1&u=/nm/20040603/tc_nm/tech_symbol_sec_dc

RE: SEC to Charge 11 Former Symbol Execs with Fraud

mikecane @ 6/3/2004 11:46:33 AM #

You've gone over the edge now. Are you killing time until your Dull PPC arrives or what?

This really has no impact on PS unless Symbol folds, which I don't see any inkling of in this piece.

RE: SEC to Charge 11 Former Symbol Execs with Fraud

;-(( @ 6/4/2004 1:14:26 AM #

You've gone over the edge now.

Perhaps the most ironic sentence ever uttered in the history of mankind.

Freedom of speech, baby. Gotta love it,

RE: SEC to Charge 11 Former Symbol Execs with Fraud

mikecane @ 6/4/2004 1:43:58 PM #

>>>Perhaps the most ironic sentence ever uttered in the history of mankind.

Every weekend the staff at your institution takes off and the temps forget to give you your meds and we are inundated with your drivel here at PIC. Now it's weekdays too. What, the staff is on strike now?

Caney: heed the signs.

;-(( @ 6/4/2004 3:05:47 PM #

Your pressured speech, thousands of posts at every Palm site around the world, the 8 hours a day you spend reading and posting to Palm sites...

It all points to an illness untreated. Get back on your lithium again, Mike. Why do you think your last boyfriend left you a couple years ago?

By the way, since you obviously will never again buy another PalmOS PDA, please stop spending an hour a day playing with new PDAs in the stores. Your existence is no doubt annoying salespeople and wasting the time of real customers.

Freedom of speech, baby. Gotta love it,

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