In a deal mirroring one recently completed by Nokia Corp., Motorola Inc. announced it will license the Palm operating system from Palm Computing Inc. for use in future wireless products.
In addition, Motorola and Nokia, as well as America Online, have invested a minority equity stake in Palm, which parent company 3Com Corp. plans to spin off through an initial public offering next year.
Motorola already is a stakeholder in the Symbian venture, which aims to use the EPOC operating system of Psion plc to power next-generation smart phones. The company also is the third Symbian member to strike a deal outside the venture. Nokia signed a similar agreement with Palm earlier this fall, while L.M. Ericsson recently joined with Microsoft Corp.
However, all concerned say these extracurricular deals do nothing to weaken the Symbian venture. Motorola, like Nokia and Ericsson before it, reaffirmed its commitment to Symbian. In fact, some analysts say the third-party agreements only strengthen the Symbian accord.
“The Symbian relationship is intact,” said Matt Hoffman, wireless equipment analyst at SoundView Technology Group. “Their operating system is still common overall with all Symbian members.”
He said Motorola and Nokia likely will add Palm’s pen-based user interface and application layer on top of the EPOC operating system, as will Ericsson with Microsoft. The result is a phone powered by EPOC, with a user interface and applications from Palm or Microsoft. Adding the powerful applications from Palm and Microsoft can strengthen what Symbian can offer as a whole.
Motorola and Nokia “are trying to leverage the existing base of Palm application developers and create products that are rich and can do much more than typical (personal information management) functions,” Hoffman said. “Maybe the original mission has changed, but Symbian is still very central to all the manufacturers’ plans. Maybe the ultimate result the end user sees will not be Symbian, but Symbian still will be present. Only the user interface changes with these next-layer agreements.”
Some concern exists that so many layers to the software stack may create too large a phone or create interoperability issues between technologies, but Hoffman said handset manufacturers likely are aware of these issues and will deal with them accordingly.
“We assume the expertise is there in-house to understand how they will work with these third-parties and integrate the Symbian operating system,” he said.
Investors seem to agree. Psion, which owns the EPOC system, watched its stock price rise as a result of the deal. Some speculation exists that Psion and Palm may eventually team in some way to further lure handset manufacturers from Microsoft.
Palm’s exploration of the wireless space may increase next year when it becomes an independent company from 3Com. Palm filed a prospectus with the Securities and Exchange Commission detailing an initial public offering to take place early next year to raise up to $100 million. In the filing, Palm said both Motorola and Nokia would buy a 4.5-percent stake in the spinoff at that time, as would America Online.
Palm said the IPO will consist of less than 20 percent of the company’s total shares.
3Com stock rose $9.81 the day of the news.
