Sony’s decision looks certain to have a considerable detrimental effect on PalmSource’s sales going forward. Sony’s Clie line of PDAs contributed around 12% of PalmSource’s revenue in the first nine months of the company’s fiscal 2004, although that proportion has been steadily declining.
Nevertheless, David Limp, PalmSource’s senior VP of corporate and business development, was supportive of Sony’s choice.
We understand and support their decision, Limp told ComputerWire. Sony has been a long time investor in PalmSource. They were unbelievably supportive of us in the early years. They will remain an investor and a customer. I’m optimistic we can do more business with them in future.
Sony paid $20m for a 6% stake in PalmSource in October 2002, prior to the OS vendor’s spin out from PalmOne.
Limp attributed Sony’s decision to the changing dynamics of the smart device industry, away from traditional PDAs of the type Sony sells, towards smart phones. In these circumstances, he argued, consolidation among PDA vendors is inevitable.
There are wide rumors that several large [Windows Mobile] Pocket PC licensees might also be getting out of the business, he added.
Sony has previously stated its intention to gear its mobile device strategy around portable games devices that will feature wireless connectivity.
The move leaves PalmSource with only one major global licensee for its mobile operating system, its old parent company PalmOne Inc. However, Limp was keen to play down perceptions of PalmSource as a vendor with only one significant licensee, citing Samsung, Kyocera and Group Sense PDA (GSPDA) as volume customers.
Although none of these manufacturers yet offer a global footprint for their Palm OS products, their focus on smart phones is consistent with PalmSource’s own ambitions. But while PalmSource is actively seeking additional smart phone partners, stories circulating yesterday that the company was close to deals to supply its software to Chinese handset giants Ningbo Bird Co Ltd and Huizhou TCL Mobile Communication Co Ltd were wide of the mark according to Limp.
One tantalizing prospect remains the possible future adoption of Palm OS by Sony’s joint venture with LM Ericsson Telefon AB, Sony Ericsson Mobile Communications AB. The handset company has been linked to Palm OS in the past and the company has also expressed its dissatisfaction with Nokia’s increasing influence over its current smart phone OS provider, Symbian Ltd.
The two could form a natural partnership. Sony Ericsson develops high-end smart phones based around a touch-screen user interface while Palm OS is arguably better placed than Symbian to meet the needs of corporates, in terms of the support of major enterprise software vendors. However, Limp would not comment on this speculation.
According to figures released Tuesday by UK research house Canalys Ltd, Sony is the eighth largest vendor of smart devices, with 202,060 PDAs shipped during Q1 2004, 3.4% of the global market.
However, the company has also seen a sharp decline in its PDA business, compared with its contemporaries. Canalys recorded a 45% slump year on year from 367,260 in Q1 2003. However, Sony’s decision to continue selling Palm OS PDAs in Japan, where it has over 50% of the market, makes sense.
Sony did not respond to ComputerWire’s request for comment before going to press.
