Acer shakes hands with Palm OS

Acer plans to base a new line of handhelds called the Acer Mobile Device on the Palm OS - the first positive sign for Palm in a while
Written by Michael R.Zimmerman, Contributor

Palm will extend its popular Palm OS operating system deeper into Asia on Friday with the announcement of a major licensing deal with Acer.

Acer, the Taiwan-based computer and computer component powerhouse, plans to base a new line of handhelds called the Acer Mobile Device on the Palm OS. The deal, which will be officially announced in Taipei, will be good through 2005, according to sources close to the company.

In addition to the licensing agreement, Acer and Palm plan to jointly develop versions of the Palm OS based on the local languages of the Asia Pacific Region and China.

The move is one of the first positive signs to come out of the company in some time. For the past two months, Palm's stock price has been stuck in a holding pattern over the $5 mark, a far cry from its 52-week high of $67.38 in November.

Two weeks ago, Palm and Extended Systems announced that they had agreed to terminate their proposed merger. The deal, which called for Palm to acquire Extended Systems, was announced in March and was to close in June.

On the same day, 17 May, Palm announced it was lowering its revenue estimates for its fiscal fourth quarter, which it will announce at the end of June. The company had originally expected to report fourth-quarter revenues of $300m to $315m but downgraded that outlook to between $140m and $160m.

At the same time, Palm also lowered its estimates for a pro forma operating loss from between $80m and $85m to between $170m and $190m.

Though the deal with Acer is likely to do little to help Palm rid itself of an estimated $300m in excess inventory, the fact that Acer will be building its own handhelds could help drive the Palm OS deeper into the very populated and lucrative Asian market. Palm currently sells Palm-branded handhelds in Japan, Korea, Taiwan and Singapore. It also sells a Japanese-language Palm m500.

Acer joins a growing list of big manufacturers licensing the Palm OS. Other notable licensees include Handspring, IBM, Kyocera Wireless, Sony, Samsung Electronics and Symbol Technologies. More than 155,000 developers are registered to develop Palm software and solutions, and there are currently 10,000 applications for the Palm.

Officials from Palm and Acer declined to comment on unannounced plans.

See techTrader for the latest technology business news.

Have your say instantly, and see what others have said. Click on the TalkBack button and go to the techTrader forum

Let the editors know what you think in the Mailroom. And read other letters.

Editorial standards