Rumor: Merger Between Palm and Handspring (Updated)

Posted By: Ed Monday, November 19, 2001 11:57:55 AM

The Wall Street Journal and CNN Money are reporting a rumor that Palm and Handspring may be planning to merge. This has driven up Handspring's stock 25% today and Palm's is up 15%. Trading of the two stocks has been very heavy.

It is important to note that the WSJ is only reporting that there is speculation about a merger and that the article says there have been no talks between the two companies.

Palm's CEO resigned recently and speculation has Jeff Hawkins, the original creator of the Palm, making a good replacement. Donna Dubinsky, Handspring's co-founder who has always been the business side of their partnership, might also be a candidate.

Stocks of both companies have been hit hard this year, partially due to a price war between the two of them. There have been rumors circulating for months that some large company might buy out Palm but for tax reasons having to do with their spin-off from 3Com, this remains unlikely until next summer.

Jeff Hawkins originally created the Palm Pilot and Donna Dubinsky built the company that sold it.

Share prices for both companies were also up last week on a Wall Street rumor that Microsoft was going to buy Palm.

Thanks to Spartacus for the tip. -Ed

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Its about time

I.M. Anonymous @ 11/19/2001 12:23:32 PM #
With the pressure coming from sony - it seems initially like a good idea - the market is getting tight - there is only so much room.

Both Palm and Handspring have a challenge ahead of them.

Sony can afford to loose money to gain market share in the short term - with support from thier other divisions...and they are really starting to show that they are capable of pushing the envelope on handhelds.

bet they do!

huggy @ 11/19/2001 12:25:48 PM #
With all the models Sony's been launching, they'd better give up and focalise in the OS... otherwise, they have a loooooot of work to do if they wanna catch up Sony...

-------------- huggy ---------------
*-- I accept language corrections --*
------------------------------------

1+1 ? or (-1)+(-1) ?

I.M. Anonymous @ 11/19/2001 12:30:20 PM #
Does it help ?

Reasons why it helps
skoty @ 11/20/2001 10:09:16 AM #
A merger like this would help Handspring, because it would guarantee their liscence of the Palm OS. If Palm gets bought out by another company who wants to be more agressive/difficult with their liscencing of the Palm OS, companies like Hanspring and Handera (not to mention Sony) are in big trouble. Heaven forbid that they are forced to start selling Pocket PC instead!

See what happens when you go on vacation, Ed?

I.M. Anonymous @ 11/19/2001 12:55:02 PM #
Sony releases a new handheld and merger rumors start flying about. Who knew you had such an effect on the industry!

Sony had little effect
skoty @ 11/20/2001 10:12:51 AM #
The fact that Sony just released a new handheld has very little to do with this. Handspring's stock has more than doubled in the last week mainly because of the excitement surrounding the new Treo. Palm's stock is just following since Handspring is a liscencee.

Don't be so deluted to think that anything your Sony does will so drastically affect the industry. It just won't happen because they only have maybe 2%-3% of the handheld market share. When you have 20%+ like Handspring, rumors like this can be caused by strong new products being announced.

RE: See what happens when you go on vacation, Ed?
I.M. Anonymous @ 11/20/2001 11:37:46 AM #
I don't think he meant Sony's new PDA is the reason for the merger rumors. I can see how you got that but read the title of the original post.

I wonder

jayhawk88 @ 11/19/2001 1:25:34 PM #
I wonder what effect this will have on Palms plan for spinning off the OS as it's own business? Have those plans already been finalized, or are they still in the works?

Having one of the OS's biggest customers roll in with Palm might make the economic forcast for a Palm OS-only company not-so-bright, as some of both Palm's and Handsprings lines would surely overlap, seeing models eliminated. It might make sense to keep the OS in-house now, and just keep licensing to Sony/all the rest.

RE: I wonder
skoty @ 11/20/2001 10:20:36 AM #
I agree. I think that Handspring should only be interested in the OS portion of the company. Handsprings already got it's own successful line of handhelds. No need to have 10+ models out there. Sony has about that many available, and look what it's doing for them (2%-3% market share). The answer isn't to flood the market with different models of the same thing, then you're competing against yourself, as well as your competitors.

RE: I wonder
I.M. Anonymous @ 11/20/2001 10:22:35 AM #
Some of Handspring's and Palm's models do overlap but the stronger products will survive. The weaker products are no loss. Judging from Hawkin's Comdex keynote, I think the Visor is on its way out. If he said "Springboard" a single time during that talk, I missed it. The future is the wireless Treo. Palm can't seem to get it together on a wireless model. A combination of Palm's current handhelds plus Handspring's wireless ones would be more competitive with Sony.

RE: I wonder
skoty @ 11/20/2001 2:54:09 PM #
I have to disagree here. Just because he didn't mention it doesn't meen they're doing away with it. I don't think he was asked to be a keynote speaker to talk about something that's been available for years. He was asked to speak on new innovations that are on the horizon.

It would be silly to say that Handspring is "doing away" with the Springboard expansion system. Not two months ago, they released two brand new products that support it.

I have to believe that Handspring will continue to dance with the one that got them here.

RE: I wonder
I.M. Anonymous @ 11/20/2001 9:28:48 PM #
Yep, and they will come out with a Treo with a springboard slot & CDMA, after they release the color Treo. The thing is, can handspring survive on just selling one device, which is basically a smartphone, which Nokia and Kyocera, Samsung are all doing right now. Nokia is the leader in this space, they are just trying to find the perfect device. It is clear that people like cellphones, but do they really want to spend money on a comco Palm/Phone? I bought my kyocera 6035, now it sits in the charging cradle. If the Treo is the size of a normal cellphone AND the service is good, I'd buy one.

RE: I wonder
skoty @ 11/21/2001 3:32:38 PM #
Actually, I beleive that Jeff Hawkins mentioned that CDMA was planned to be supported in his Q&A session after the keynote.

However, I havn't heard of a Treo with a springboard slot. Where you just being ironical or is that for real.

Hybrid

sford @ 11/19/2001 1:36:53 PM #
Mixed feelings on this one. I kinda feel warm and fuzzy, like a 'family reunion/prodigal son's return' kinda thing. Both Palm and HS have some creative juices--not to mention customer loyalty--left. This could be just what's needed, if they focus on the strengths of the two and make them stronger. If they just compete (love-hate kinda thing), then they'll both just die.

Ultimately, though, I think I'd have to go with the "'bout time!" sentiment.

RE: Hybrid
Altema @ 11/19/2001 2:15:55 PM #
I have mixed feelings as well, will they kill the springboard or SD? If they kill SD/MMC in it's infancy, how will they put a springboard slot in a device that is not much thicker than the springboard itself? Handspring has already shown that a small device and a large module don't mix well (look at the Edge). Of course, they could cover both bases by using dual SD/MMC slots and making available a springboard adapter. This would maintain backwards compatibility for those who have a heavy springboard investment, without penalizing those that do not. The two slots would not be wasted, as you can keep a memory card in one slot, and use the other slot for transfers, game cards, network cards, etc. There is already software to take advantage of dual slots (thanks HandEra!), and Sony would not be able to make a dual slot device in a competitive size.

RE: Hybrid
I.M. Anonymous @ 11/19/2001 2:39:00 PM #
if they want to compete with sony they gotta get rid of springboard. there's no way to compete on design with sony when u have a springboard module as thick as their T-series.

RE: Hybrid
I.M. Anonymous @ 11/19/2001 2:41:08 PM #
"Sony would not be able to make a dual slot device in a competitive size."

I can tell you, you are wrong ... you don't know sony well enough ...
I've been using sony's electronics since like I was born, their art of making electronics small is unmatchable by any other companies. (maybe Sharp)
the question is does sony think dual slot is such a big deal.

RE: Hybrid
stonemirror @ 11/19/2001 4:29:11 PM #
Altema wonders "will they kill the springboard or SD [in the fabulously unlikely event of a Palm/Handspring merger]?"

I don't know if it was under your radar, but SpringBoard's dead as a doornail...

RE: Hybrid
I.M. Anonymous @ 11/19/2001 4:41:35 PM #
i think sony is out to really compete with microsoft. if they would merge with palm then they will be stronger. i suppose sony-apple (with unix based OS X) is not a bad idea too.

sony as of date, has teamed up with palm, ericsson, aol-time-warner, and nokia.

RE: Hybrid
I.M. Anonymous @ 11/19/2001 6:28:37 PM #
Actually, SONY finally will face MS and they will try to kill each other... X-BOX v.s Play-Station ? CLIE-Palm v.s PPC ?

RE: Hybrid
skoty @ 11/20/2001 3:03:10 PM #
"I don't know if it was under your radar, but SpringBoard's dead as a doornail..."

I don't know if you've been keeping up with current events, but people are still makeing (and buying) springboards. At Comdex a bluetooth springboard was presented. On this very website, about a month ago, the Memory Stick springboard was announced/reported. Handspring came out with two brand new devices, about two months ago, that have springboard slots.

"Dead as a doordail" is a bit innacurate. Perhaps a better way to say it would be that springboards aren't as popular among CLIE users. Sony users on this site are continually blowing things way out of proportion.

I'm not so sure

I.M. Anonymous @ 11/19/2001 1:43:15 PM #
Both Handspring and Palm innovated their market and brought something new to it, which would imply that this merger would be the best thing for the PDA market. But recently they are stuck on the same old technologies, afraid to move any further and I think having two companies that conduct business in that pace might be too harmful.

It would be nice for their product line.

Merger

I.M. Anonymous @ 11/19/2001 1:59:19 PM #
For those who say that Palm should only concentrate on the OS, please learn about a business before you comment on it. Palm makes about $8.00 per unit under a liscense from someone like Sony or Handspring and about 10 times that on a 500 series. Which market would you rather be in?

The merger makes sense and I hope that it happens. Palm doesn't need the likes of John Sculley, who all but ruined Apple. They need someone like Jeff Hawkins who had a vision and a plan and still seems to be in the forefront of developing handhelds.

RE: Merger
I.M. Anonymous @ 11/19/2001 2:13:53 PM #
A few thoughts:

Rule 1. The OS usually doesn't break, whereas units do. If the OS breaks, it gets replaced with a new version that fixes the problem. An OS repair is called a user "upgrade", whereas a defective unit is called a manufacturer "headache".

Rule 2. You don't have to give a warranty to sell the OS, but you do have to give a warranty to sell a device. (See Rule 1).

3. Devices sometimes don't get sold and are returned to the manufacturer. The OS resides on a chip and is deleted with very little or absolutely no cost to the manufacturer. Old devices get sold cheaply and ruin the market.

Yes, Palm makes very little by selling the OS. Those contractual arrangements with other device manufacturers should be changed when the contracts run out. Microsoft seems to do OK by selling the OS and other software and not devices. Microsoft makes more than $8 per unit selling the OS to resellers. Palm could make this business concept work too with better management.

My view of Palm right now is that it's giving away the OS to anyone who will take it, and it's stretched to the breaking point trying to perfect both the device and the OS. It needs to focus on a single mission and do one thing with class rather than two with mediocrity.

JBH

RE: Merger
I.M. Anonymous @ 11/20/2001 11:08:21 PM #
can't agree more with JBH. Besides, regarding how much Pal can make on device itself, it is questionable. Especially when other manufactueres come up with better and better product, the market share of Palm-manufactured device will decline (if they don't a better job), which in turn will increase the fixed cost sharing of each Palm device. With going up price structure, it is hard to image whether Palm-manufactured device can remain competitive in the market...

my 2 cents.

Palm/Handspring Merger

gvbfan @ 11/19/2001 2:36:04 PM #
I think the merger is a great idea. Now is a very strategic time for two companies to combine because of the recent resignation of Palm's CEO.

Stupid... Companies should be separate

I.M. Anonymous @ 11/19/2001 2:41:51 PM #
Palm + Handspring = Failure

What is the deal these days with failing companies deciding to merge together?!? Well, I guess the urge to merge is intrinsic to corporations also.

I would rather see both companies stay separate. Palm and Handspring need to fix their problems first.
Merging these 2 companies won't solve any problems and will only make things worse. It's like 2 screwed up people getting married, doomed to failure. Have you been following the antics of Carly and proposed HP/Compaq merger?

RE: Stupid... Companies should be separate
drew @ 11/19/2001 5:49:37 PM #
quote: "
What is the deal these days with failing companies deciding to merge together?!?"

What, you mean like Apple and Next?? Have you seen Apple's numbers lately, and their incredible surge of approval in the press (tech press in general, not just Mac).

It can be done well, and it can be done poorly. Why assume it's a bad idea for these two?

so.... now what.

EGarrido @ 11/19/2001 4:33:58 PM #
I'm not sure what my take on this merger is. I think I like it, but I think they should take the innovation of HS and put it into Palm's devices. I think HS is an amazing company, but I'm not in love with their devices.

Just my $.02

Eric Garrido

Sony has better look but poor expandability

I.M. Anonymous @ 11/19/2001 5:44:57 PM #
Sony doesn't offer the expandability that is offered
with the Handspring, and since the newer Palms have
Bluetooth, the addition of modular Bluetooth options
will offer expandability to Palms. True Sony could
add these features to their own products, the question
is considering their disposition that is bent on proprietary technology, would users prefer their technology if sony is the only one to distribute it.
I doubt Sony would release a Clie with bluetooth,
but they might establish their own radio transmission standard.

RE: Sony has better look but poor expandability
I.M. Anonymous @ 11/19/2001 5:58:39 PM #
I don't think it'll be long before drivers and devices start popping up for USB add-on's. It wouldn't take much to take, say, a serial GPS and convert it for use on USB. Same with many other devices. Since the Sony and others support USB peripherials, that opens the expansion options to unlimited proportions. In fact, once drivers start being written, we could easily see desktop scanners, printers, cameras, etc. used with the Sony, Palm, et al. I'm really suprised that is not already being done. When you consider the fact that many many USB devices can be hung off a single host, I think we'll even start seeing support for multiple devices at a time. Like GPS use at the same time as a camera and wireless modem.

Tip DS

RE: Sony has better look but poor expandability
I.M. Anonymous @ 11/19/2001 7:08:10 PM #
1) which palm have bluetooth built-in ? I can't find anywhere, maybe it's not avaliable in this part of US yet.
2) why you think sony won't have bluetooth on clie ?? they are the first PC maker to build bluetooth into their notebook computer, u'll be surprised when they bluetooth builtin their palm (hint: I am pretty sure u'll see bluetooth built-in on Clie first).

"I doubt Sony would release a Clie with bluetooth, but they might establish their own radio transmission standard."

stop dreaming .. sony won't establish their own radio transmission standard. So far I haven't seen sony doing anything u say they might do. Are Palm/handspring supporters so lack of facts that they need to make things up to make clie look bad ??

RE: Sony has better look but poor expandability
mikeliu @ 11/19/2001 9:37:25 PM #
besides which, I don't see any Bluetooth modules for Palm's out yet, but I do see a Bluetooth module (sure not integrated, but still) sitting in my closet at this very moment for my Clie 750. Made by Sony. That makes me somewhat doubt that Sony is planning on developing their own wireless standard or anything, they're actually very big on this whole Bluetooth thing. I haven't seen any other PDA Bluetooth modules, any other computers with built-in Bluetooth, and any other cell phones with Bluetooth built in (though Ericson has one too as I understand). Sony's very big on this whole integration between product lines thing, and Bluetooth fits perfectly into that. They've really been hyping it up here in Japan.

RE: Sony has better look but poor expandability
sub_tex @ 11/19/2001 11:29:57 PM #
I agree. Sony seems to be going forward with Bluetooth.

I know i'm still drooling over their picturebook that has BT built in.

http://www.dynamism.com/c1vsx/index.shtml

Let's see their next wave of PDA's in 6 months.

RE: Sony has better look but poor expandability
I.M. Anonymous @ 11/20/2001 9:19:40 AM #
> I don't think it'll be long before drivers and devices start popping up
> for USB add-on's. It wouldn't take much to take, say, a serial GPS
> and convert it for use on USB. Same with many other devices.

Palm, Handspring, and Sony PDAs with USB are all USB slave devices. You can't simply attach other USB peripherals to them as they are essentially USB peripherals themselves. Plus the PDAs couldn't provide enough power to run those peripherals anyhow.

RE: Sony has better look but poor expandability
I.M. Anonymous @ 11/20/2001 11:13:35 PM #
well, the newest CF "cleeve" for T-series might change that. There are plenty of CF-related expansion devices (modem, network, wireless, GPS, etc.) and they are usually cheaper, right?

Hawkins more or less said "NO".

I.M. Anonymous @ 11/19/2001 5:56:30 PM #
On the question of whether Handspring will mount a takeover bid on Palm:

"Takeover bid? Hey, that sounds like high finance and stuff. 'We're going to top your dollar share with our dollar fifty a share.' We get this question all the time: 'Well, shouldn't you guys be combined?' I think Palm's got enough problems, they don't need to have us back in there.... We have a lot of work to do on our own, and we're focusing on that."

- Jeff Hawkins at Comdex

http://www.pencomputing.com/palm/palmnews/palmnews-11-14-01.html



RE: Hawkins more or less said
I.M. Anonymous @ 11/20/2001 9:53:35 AM #
That response was to the question of a Palm takeover of Handspring. This rumor is suggesting a merger between the two with Hawkins as CEO. That actually sounds more like a Handspring takeover of Palm! I wonder what his response would be to that idea?

Springboard and SD!!!

I.M. Anonymous @ 11/21/2001 10:24:46 AM #

Springboard and SD should be together. Esp when you have GPS, Where else can you put the maps?

This geneous built two companies

I.M. Anonymous @ 11/22/2001 12:24:53 AM #
I meant Jeff, built these two company....then sold both of them..... smart rich bastard

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