PalmSource Secures $20 Million Investment From Sony

Posted By: Ryan Tuesday, October 8, 2002 9:47:36 AM

PalmSource Inc, announced that it has received a $20 million minority equity investment by Sony Corporation that will result in its ownership of about a six percent share of PalmSource. This investment, combined with expanded business and technical collaboration agreements enhances both companies' strategic commitment to grow the Palm Economy.

Sony has been a Palm OS licensee since 1999, and with the introduction of its CLIE personal entertainment organizer product line, has brought to market some of the most innovative and successful Palm Powered products.

In addition to the investment, Sony will expand its business and technical collaboration with PalmSource. This marks significant progress toward Palm Inc's plan to create two independent companies.

"Sony's expanded commitment to the Palm Economy illustrates the stimulating value that an independent PalmSource will have on the handheld industry," said Eric Benhamou, chairman and chief executive officer of Palm Inc. "We remain driven to complete the external separation of our PalmSource subsidiary on an aggressive timetable."

"The CLIE entertainment handheld with the Palm OS platform is a key product for the broadband era, through which users can enjoy a wide variety of content and services easily, anywhere, anytime. Our ongoing cooperative relationship with PalmSource will also advance the evolution of the Palm Economy," said Keiji Kimura, Corporate Senior Vice President of Sony Corporation and NC President of Sony Corporation Mobile Network Company.

"Sony's products stand for innovation and high quality worldwide," said David Nagel, president and chief executive officer of PalmSource, Inc. "We are delighted that Sony has chosen Palm OS as the platform for its handheld computing products and look forward to continued innovation and leadership resulting from this relationship."

Thanks to Adam, for the tip. -Ryan

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Good news

skipbremer @ 10/8/2002 9:58:21 AM #
As a long-time Palm user and a recent Clie user (T615C), I find this to be very good news indeed. To me, this seems to help solidify the Palm platform's future. Now, if Sony will only make a Clie/CDMA device...

RE: Good news
helf @ 10/8/2002 10:03:56 AM #
woohoo! Sony does NOT want hte palm os to die.. Maybe they will eventually buy it out completely :)

RE: Great news
Cheetah @ 10/8/2002 10:17:58 AM #
This makes a lot of sense. I thought that Sony was the most likely company to bail Palm out, and it looks like it has.

If things really work out, I agree that there is a possiblity that Sony would completely acquire PalmSource.

RE: Good news
EdH @ 10/8/2002 11:09:56 AM #
This is good for PalmSource and likely the PalmOS community in general, though it has to make Handspring, Samsung and even PalmSolutions a bit nervious having one of their biggest competitors buy the OS that runs their devices.

Lets just hope Sony doesn't start to exert pressure towards Sony proprietary ideas.

RE: Good news
peter167 @ 10/8/2002 11:22:53 AM #
Hey, come on. It is only 6%. Not even a tenth. This shows that Sony will like to focus on its handhelds instead of the OS. They will let the Palm OS grows itself. The money they injected is just a sign of sympathy to the ill-linked Palm so that the whole company (both OS and hardware) can survive a little bit longer.

An intelligent manufacturer will not try to tie up their products with something that they don't need to. Just like Dell does not care what OS their PC runs on (although it is MS.) The only all-in-one is Apple, which proves to be have little success in terms of marketshare. Sony wants to dominate in the marketshare number. No doubt about that.

******************
Lie is the future.

RE: Good news
Khunbenja @ 10/8/2002 12:26:18 PM #
Really looking forward to a Clie GSM handheld phone - something like the 7135. Can't wait.....

RE: Good news
msmasitti @ 10/8/2002 5:15:04 PM #
Peter, 6% turns into 10%, then 20, etc. It takes time - but I have no doubts that Sony would buy it out completely. Which I am all for: the OS needs a revamp.

------------------------
Mario
O/T Mod
[url]http://www.wc101.com[/url]
RE: Good news
peter167 @ 10/8/2002 6:24:35 PM #
I don't know what gives you an idea that Sony has to buy out Palmsource gradually.

1)Palmsource should have a better chance surviving on its own, compared to its pal - the Palm hardware company, which gives us the Zire after 18 months of R/D
2)If palmsource can survive financially, Palm OS will have a more flexible future (because if Sony completely purchases Palm OS, other licensees, such as Acer, Samsung, may halt their hardware development because of concerns over monopoly on the OS)
3)If Palm OS eventually becAme dead, Sony could have choosen other platform to work on, such as Symbian, Linux and PPC, or whatever you call it at that time.

You have to understand Sony is a hardware company, just like Dell. And I don't forsee why Sony should buyout the Palm hardware company. If you see boring products like the Zire, any company will say what I should buy this company? To sell organizers? Or to manufacture toys? Hey, it's a PDA. A classy tech device; not the 5-year-old kids at McDonald's still licking their fingers with chips and ketchup.

To say Sony will buy out Palm is absolutely an one-sided, thoughtful wish. Palm could survive on its own feet. With the Zire, Palm does not stand a chance. With low-end PPC's at $299, Palm would have a hard time convincing first-time power users why they should choose a Palm $500 Tungsten instead of a $300 Dell or a $300 Viewsonic or a $300 HP/Compaq.

It's just my 2 cents.

******************
Lie is the future.

RE: Good news
myname @ 10/9/2002 4:44:51 AM #
Sony is a consumer electronics company, what that includes is Research and development on Software and hardware. They do everything. Look at the Clie only apps on your palm, those are software, look at the 320X320, 320X480 screen on your clie, those are Software + hardware, Look at playstation, that is Software + hardware.

btw: Sony is nothing like Dell.

I'll tell you why Sony would buy palm (hard ware division)
stellaboy @ 10/9/2002 4:34:09 PM #
They would buy them to get rid of competition. Palm and Sony make the best palm pdas between them at the moment. If Sony owned Palm they could become Sony Palm. This way Sony Palm would make the best PDAs, no competition.

RE: Good news
peter167 @ 10/10/2002 5:54:40 PM #
Sony makes software for PS2? I think you should take a deeper look.

Sony has to create the new software for the NR-series screen just because ... it NEEDS to. Or should we say because Palm built-in apps are limited; therefore, Sony has to write the apps that are compatible with their screen resolution. If Palm built-in apps are ready for multiple resolutions, Sony wouldn't have to rewrite those apps. A hardware company focus on hardware, and of course, some kind of specific software need to be accompanied so that the hardware will function properly (A video card and its driver are a good example.)

Futhermore, I don't know why Sony needs to buyout Palm to get the dominant marketshare. First, Sony is gaining momentum on the PDA war, and its new hardware proves that it is capable of getting more marketshare in the coming year. Do you think Sony believes in all the BS Palm just brought out about Zire to bring more new potential buyers into the PDA market? Not a chance. This is all market tactics. We'll see miserable Zire sales this Christmas season. It will be way weaker than the launch of the m10x series; this time Palm will try to blame this failure on the poor economy.

Palm has to live on its own feet with newer, better products. If they just stand on their ground, their future will be like Netscape's - demise. And netscape is acquired by AOL, at a dirt cheap price. And I think Palm fans will not want to see Palm going down to the sink. However, given their ability and past performance, I doubt that these guys can turn the company around. Unattractive products with price premiums - even GM cars are boring but cheap. Palm units are boring yet expensive.

******************
Lie is the future.

Send in the trolls...

Strider_mt2k @ 10/8/2002 10:03:33 AM #
I guess it's time for the Sony trolls with their new fake mames to start chiming in...

BTW losing the anon posts hasn't changed very much on here.


strider_mt2k@yahoo.com

RE: Send in the trolls...
LotSolarin @ 10/8/2002 10:13:04 AM #
And what, like it says Strider on your birth certificate? :-) Try to be a little more optimistic about it. Most of us has attested that we've seen a significant improvement in the signal/noise ratio since the change was made.

PalmSource's point is right on track. This is great news because it makes PalmOS development more powerful, it continues to bind Sony to the actual OS (perhaps Sony "augmentations" to the OS will be integrated in the next version?) and most importantly it symbolizes the concept of all the Palm Powered companies acting as patrons toward PalmSource.

This, I think, is exactly what the spinoff concept was going for. The future of Palm handhelds is all PalmSource. They will *drive* innovation in the other companies and help to stir up demand. It's just what we wanted!

RE: Send in the trolls...
Davy Fields @ 10/8/2002 10:24:56 AM #
"BTW losing the anon posts hasn't changed very much on here."

I was going to say the same thing...... but then I realized, everytime I saw some undeserved negative post, it was almost always coming from you, so yeah, it doesn't help if people still post anonymously..... we can see who you are now.

-Davy Fields
http://nr70.davyfields.com

RE: Send in the trolls...
PFloyd @ 10/8/2002 10:43:09 AM #
I like the new posting rules. Maybe there could be a way to filter your Comments view to block out posts from people who are just lowering the signal to noise ratio.

RE: Send in the trolls...
Admin @ 10/8/2002 11:44:17 AM #
PFloyd, I have something in mind for that.
RE: Send in the trolls... (+1 insightful ?)
Token User @ 10/8/2002 12:33:58 PM #
Perhaps a /. style rating?

~ "Don't be too proud of this technological terror you've constructed." - DV ~
RE: Send in the trolls...
HandyMan @ 10/8/2002 1:22:53 PM #
I like slashdot ratings. But you could into the problem of karma and post whores that happens so often.

But back to the topic on hand... I think this is a great idea. It would be even better if some of the others chip into PalmSource. Since PalmSource represent the OS, they should be controlled by the ALL the device makers not just PalmSolutions or Sony.

RE: Send in the trolls...
Strider_mt2k @ 10/8/2002 6:14:02 PM #
I am on file here and on Yahoo. Any one can check me out if they so choose. And they can contact me personally with any problems.
Imply what you will.

And yes, I post negative things where I see negative things happening. Like here with the bogus posters.

Like here with the Sony trolls, of which I speak, and we all know. I am not the only one to use the term.

Feh, what's the use trying to explain anything to these people? I'm not wasting my time anymore.


strider_mt2k@yahoo.com

RE: Send in the trolls...
Massman82 @ 10/8/2002 8:31:47 PM #
Firstly, if you are a Sony enthusiasts, meaning you have come to know that most Sony products are of a high quality and are happy to own one. Therefore you praise their products. This does not make you a troll.

Strider, you are right. There are still some people who post ignorantly but the number has diminished and I would attribute that to the removal of anonymous posting.

Roman Pedan
Palm V/Vx
Will get a Palm OS 5 handheld

RE: Send in the trolls...
jjsoh @ 10/8/2002 9:51:17 PM #
: I guess it's time for the Sony trolls with their new
: fake mames to start chiming in...
:
: BTW losing the anon posts hasn't changed very much on
: here.

Does anyone else see the irony in this post? :/

I don't see how your start of this thread contributes anything to the discussion. Why do you let the so-called "Sony trolls" bother you so much? When you post just as lame a comment as any other "troll" might probably only adds more fuel to the fire.

If there is any place online where you can post a message or comment, expect trolls. Period.

: Feh, what's the use trying to explain anything to
: these people? I'm not wasting my time anymore.

Heheh.. Don't take this the wrong way, but after reading all you've written before this final line, I found this statement to be quite humorous. :)

Jim

RE: Send in the trolls...
jjsoh @ 10/8/2002 10:12:08 PM #
Argh.. I make no sense in my previous post! I hate it when that happens. How about a "Preview" button in your next version, Ryan? Hmm..?? :)

Anyway, it's late and I made myself to sound like a babbling idiot (which, by the way, is not too hard for me). I guess to sum up: live in peace with the trolls. Sometimes, they're funny. Hehe...

In all seriousness, there's a troll in most of us. Some just disguise it better than others. :D

Jim

We all knew this was coming

PalmusMagnus @ 10/8/2002 10:02:47 AM #
I don't like Sony's tendancy for proprietary technology. However, their rabid innovation with Palm-enabled hardware makes me glad to hear this news. I would be comfortable with up to a 45% Sony stake in PalmSource.

If you find yourself in a hole, stop digging.
RE: We all knew this was coming
robman @ 10/8/2002 10:59:37 AM #
Sony's tendency to use propietary technology (see Memory Stick, sound enhancements, add-on connectors, and this NX70-V quasi CF slot controversy) are the main reason I have not bought a Sony handheld yet.

What sort of pull does $20 million bucks get you? Does this mean that Sony will be able to force PalmSource to make the MS natively supported? (Bad!) Or does it mean that Sony will be able to force PalmSource to natively support virtual graffiti (Good!)

I just hope this cash goes to good use.

Palm Researcher at the University of Texas at Austin
http://www.edb.utexas.edu/petrosino/pda

RE: We all knew this was coming
dspeers @ 10/8/2002 11:29:01 AM #

It's impossible to know what $20MM will buy you without seeing the terms of their contract. Venture capitalists routinely invest this amount, and their only return is in stock valuation.

My guess is that this move is intended to (a) ensure the stability of the Palm platform; (b) solidify Sony's commitment and rights as a licensee; and (c) provide some long-term return to Sony in the form of market capitalization. Whether it includes other rights, like access to source code, preliminary review of future technical specifications, special consideration for back-ports of Sony's innovations into the core OS, etc., we wouldn't know unless they told us. And I'm not sure why they would.

RE: We all knew this was coming
robrecht @ 10/8/2002 11:54:43 AM #
I don't think native OS support for memory stick would be necessarily bad unless SD was no longer supported (which isn't likely). SONY currently has a lot of great products that use memory stick.

Note that Konica has a new 4 GB super small digital camera that supports both SD and memory stick.

Note also that Matsu****a announced a 1 GB SD card with 10x transfer rate of 128 MB SD card. Meanwhile, SONY still hasn't released a 256 MB SD card. Get with it, SONY!

Thanks, Robrecht

RE: We all knew this was coming
robrecht @ 10/8/2002 12:03:05 PM #
Correction: Konica 4 MegaPixel camera

Thanks, Robrecht
RE: We all knew this was coming
twalk @ 10/8/2002 12:38:35 PM #
My guess is that Sony will be slowly "paid back" that amount with lower licensing charges for several years.


RE: We all knew this was coming
myname @ 10/8/2002 12:51:24 PM #
huh !? where did u get the idea of Sony getting Palm OS at a lower price ??

RE: We all knew this was coming
coolchan @ 10/8/2002 3:14:38 PM #
Yes the Konica camera is great! I got it, sold my old one. Now I have more gadgets to use with the MS.

RE: We all knew this was coming
twalk @ 10/8/2002 5:45:09 PM #
"huh !? where did u get the idea of Sony getting Palm OS at a lower price ??"

I don't know if they are or not. I've just seen enough of these deals to know that that is often what happens. Plus $20M != 6% of PalmSource. Maybe 75%, but not 6%.



RE: We all knew this was coming
rsc1000 @ 10/9/2002 1:12:23 PM #
>I don't know if they are or not. I've just seen enough of these deals to know that that is often what happens. Plus $20M != 6% of PalmSource. Maybe 75%, but not 6%.

Huh? Where are you pulling yr estimates from? The article say that this investment comes to about 6%, and anybody/everybody knows that PalmSources total value is NOT less then $30 million (as you suggest with yr '$20M = 75%' estimate.

As for yr assumption that Sony will get a better price on the OS - thats not likely. PalmSources credibility with other liscensees would be at stake. Its likely what the articles says: an agreement to buy $20M in stock PLUS an agreement to work together on various OS technologies.

Ownership breakdown

potter @ 10/8/2002 11:05:40 AM #
How does the ownership of PalmSource now break down? I assume that Palm and/or 3Com own a majority of PalmSource, but how big? And then, who else owns a large chunk of PalmSource?

RE: Ownership breakdown
KRamsauer @ 10/8/2002 12:35:55 PM #
http://biz.yahoo.com/hd/p/palm.html

RE: Ownership breakdown
jjsoh @ 10/8/2002 10:02:27 PM #
KRamsauer

I think potter was asking about PalmSource, and not Palm, Inc. ;) Does anyone have some numbers? I'm a bit curious, too.

Jim

RE: Ownership breakdown
KRamsauer @ 10/9/2002 5:03:09 PM #
Palm Source is still part of Palm Inc. We wont' know the exact breakdown until later. However since palm source stock is being spun to PALM owners, the ratios will be the same.

Sony-Palm Phones?

razorpit @ 10/8/2002 11:19:45 AM #
Aren't the current crop of Sony "smart" phones Symbol based? Kind of makes you think they will be dropping that platform soon.

Imagine the possibilities of a Palm powered Sony phone. We could have holographic communicators like the ones on Star Wars by the end of the year! ;-)

--Dave

RE: Sony-Palm Phones?
Mike Allwitt @ 10/8/2002 11:53:22 AM #
I thought they were symbian based, through their partnership with Ericson. The last I heard the Sony-Ericson collaboration was beginning to hit rough water.

Mike Allwitt
Logic X Design, Inc
Database Consulting
- Yeh, it's cool. Was it, supposed to do that?
RE: Sony-Palm Phones?
razorpit @ 10/8/2002 12:13:58 PM #
Sorry Mike you were right. I must have had a brain fart, I meant to say Symbian.

--Dave

So Palm Hardware division worth about $30M?

gotogo @ 10/8/2002 11:37:53 AM #
If 6% of PalmSource is $20M, this makes PalmSource worth about $333M. Currently the total price (market cap at current share price) of all of Palm is about $360M. This makes the Palm hardware division division only worth about $27M.
It should be interesting to see how they divide up the value, and how some accountants might try to create some value in the split....

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