One Palm, Two New Names

Handheld device maker Palm is undergoing a change of its name plate as it formally divides its hardware and software divisions.

The company said it would discard its current corporate moniker of Palm, and beginning this fall will be known as palmOne Inc. and PalmSource Inc.

The name change is part of a wider reorganization of the company into separate hardware and software units. One unit, which is the developer of the Palm operating system for wireless devices, will be known as PalmSource Inc. The other unit, focused on making Palm portable computing and communications devices will be known as palmOne.

Devices sold beginning in the spring of 2004 will carry the new palmOne logo. There will also be changes in the company’s ticker. The “PALM” symbol will be removed from the Nasdaq and replaced by two new stocks: PalmSource under the ticker and PalmOne by “PLMO” on the Nasdaq exchange.

As part of repositioning its device hardware unit, Palm in June announced it purchased handheld rival Handspring Inc. in a $169 million stock swap. The transaction is expected to close this fall.

Part of the reason for the splitting of the hardware and software units is to separate its relationships with its friends and foes. PalmSource’s operating system not only runs on its devices, but those manufactured by Sony Corp. and Symbol Technologies

As part of the name changes at Palm, it will be discarding the “Palm Solutions” brand and under the palmOne label will be marketing Treo, Tungsten and Zire devices. The name Palm will still be the name of the operating system, but other hardware makers devices using the handheld OS will carry the “Palm powered” label.

Rebranding is a complicated business, and a plan has been underway at Palm to split its hardware and software divisions for a couple of years. On Monday, the company said the name palmOne was chosen following interviews with a broad spectrum of Palm customers, partners, employees, naming consultants and “industry influencers.”

Palm said the new name is characterized in two colors — deep red for the word ‘palm’ and vibrant orange for ‘One,’ reflecting the subbrand colors for the company’s Tungsten line of solutions for mobile professionals and business and its Zire line of solutions for consumers and multimedia enthusiasts, respectively.

The lower-case treatment of the company name gives the word “palm” visual emphasis,” the company said.

One reason for the company’s re-branding efforts may be the slump in sales for handheld devices. At a time when many consumers and businesses aren’t gobbling up PDA’s, wireless phones have taken on far more technological sophistication and applications. Palm also faces pressure from PC maker Dell Computer , which is also targeting the low-end of the handheld device market.

On Monday, tech research firm IDC issued a report saying as enterprises and consumers continue to heavily scrutinize technology purchases, the evolution of mobile phones will cap market expansion for one of the hottest technology products of the 1990s. According to new research from IDC, potential growth for the unconnected PDA market will shift largely to voice-enabled devices.

“From mobile phones to converged mobile devices, which combine the data capabilities of PDAs with the voice communication capabilities of mobile phones, competing device types will draw buyers away from traditional handheld devices. In 2003, the worldwide handheld device industry will decline by 8.4 percent to 11.35 million units, its second straight year of decline,” IDC said.

While limited growth is expected to return in 2004, dreams of a 20 million unit-a-year market will be replaced by a less than 15 million unit-a-year reality — a reality that is finding companies like Dell, Handspring, Hewlett-Packard , Palm, and Research-In-Motion looking to converged mobile device production, IDC added.

The report is part of IDC’s Worldwide Smart Handheld Devices Forecast and Analysis for 2003-2007.