Palm Report Hints at Uncertainty Over Next Gen OS
Palm's annual report was just released late Friday. The report contains some hints as to what Palm is thinking in regards to the next version of the Palm OS. It also sheds some light on Palm's current situation with PalmSource concerning what will happen with the next-generation Palm OS.
In the risks related to Palm's business section of the annual report 10-K on page 21 under the heading: Our product strategy is substantially dependent on the Palm OS, which is owned by PalmSource, a former subsidiary of Palm that was acquired by Access Co., Ltd. It states:
We have a license agreement with PalmSource which extends through December 2, 2009. Our license of the Palm OS from PalmSource is critical to the operation of many of our products. We rely on PalmSource to provide the operating system for all of our handheld and a significant portion of our smartphone products.
Contemporaneously with the license agreement, we entered into a co-development agreement with PalmSource to develop a next- generation Palm OS for use in future Palm products. PalmSource did not timely meet certain of the milestones under the co-development agreement, relieving us of our obligation to make minimum royalty payments under the license agreement after calendar year 2006. We are presently in negotiations with PalmSource to expand our development and distribution rights to the current version of the Palm OS. If we are unable to successfully conclude these negotiations, it may adversely affect our ability to develop and distribute new products based on a next- generation version of the Palm OS. Regardless, we will continue to release new products based on the current version of the Palm OS.
Contrary to what is being reported on other websites, this does not mean Palm Inc is going to stop making products based on the Palm OS. It also does not definitively indicate whether or not Palm Inc is planning to use PalmSource's Access Linux Platform, as no licensee's have been announced for the still under development ALP operating system.
Palm Inc will continue to make Palm OS products, but is not longer contractually committed to providing a minimum royalty payment to PalmSource as a result of the missed deadlines. Palm's license agreement for the current generation Palm OS extends through 2009 and Palm Inc would still have to pay royalties based on units shipped.
This statement does hint that Palm may not be interested in PalmSource's future operating system products and is instead looking to develop and control its own future "next-generation" Palm OS based operating system.
The report states that Palm is in negotiations to expand its development and distribution rights to the current version of the Palm OS. This could indicate that Palm desires to further develop the Palm OS itself, picking up where PalmSouce stopped.
Since being acquired by Access PalmSource has abandoned future development on the Palm OS in favor of Access Linux Platform. While ALP will offer Palm OS Garnet compatibility, PalmSource wants developers to move to its new linux based tools and APIs.
There has been much speculation that Palm Inc has been gearing up to develop its own operating system. Palm would likely either use the current Palm OS Garnet as a base and wishes to offer compatibility with existing Palm OS software.
Ultimately, it is unclear from this report as to what exactly Palm is negotiating with PalmSource and we can only speculate as to what is going on behind the scenes. There are no official conclusions to draw here as this section of the annual report looks at a wide variety of potential risks and hypothetical threats to its business.
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