What's next for Palm Computing?

Palm President Alan Kessler downplays hardware, stresses Internet services, enterprise computing and licensing.

3Com's spin-off of its popular Palm Computing division into a separate company is a move that many been clamouring for. So what's next for a business that, in the words of 3Com Chairman and CEO Eric Benamou, has "reached critical mass"?

As an independent entity, Palm's focus will be less on hardware and more on Internet services, enterprise computing partners and licensing its handheld operating system, officials said. For example, Palm has plans for an upcoming enterprise services program, which will include partnerships with companies that already have well-established services, according to Palm president Alan Kessler, who will keep his post at the company even after Palm hires a new CEO. "Clearly it's not rocket science," Kessler said. "We need to add to our service and support relationships. We can do that... with various types of partners who can help us."

Palm already has a leg up in the enterprise due to its relationship with IBM, whose Workpad device runs Palm's operating system. "The Workpad folks and the Palm folks work together to form enterprise deals," said Steve Nicol, vice president of sales at Puma Technology, which makes synchronisation software for both the Palm platform and for Microsoft Windows CE.

In terms of licensing agreements, Palm's goal is to see software partners choose Palm over Windows CE. But this is already happening. Callisto Software, which makes software that remotely manages notebook computers running Windows 98 and NT, next year plans to support handheld devices -- starting with the Palm platform. But as Nicol pointed out, "Palm has a bit of a battle because a lot of IT managers start out being pro-Windows and therefore pro-CE."

Palm hopes to get another leg up on CE via its partnership with Sun Microsystems. The two companies are working on a version of Java for handhelds, although neither will say when it's due. "The microversion of Java will bring a million and a half Java developers to Palm," Kessler said. "That will help us continue to unleash the creative powers of the Palm economy."

While Palm may be focusing more on partnerships than on hardware, it can't ignore the threat of its latest partner/competitor. Handspring, founded by the inventors of the PalmPilot, this week launched the Visor, a relatively inexpensive handheld that runs the Palm OS.

Palm has said that the Visor is not a threat because it's a consumer device, but industry insiders think otherwise. "I think that Handspring will definitely cannibalise some of Palm's enterprise efforts," said an official at one company that develops software for the Palm platform. Indeed, enterprise software developers such as Puma and Riverbed Technologies plan to support Handspring devices, according to company officials.

Handspring's strength lies in its "Springboard" slot, which holds Springboard modules that perform different functions. There's a module that adds more storage and one containing an electronic golf game. Handspring officials said to expect "hundreds" of modules by next year, including a "Bluetooth" module that will enable easy communication between the Handspring and other mobile devices.

Right now, Handspring supports the Palm OS exclusively, but that may be a temporary situation. "The Visor is a Palm platform device, but Handspring doesn't have be exclusively a Palm platform," said Ed Colligan, Handspring vice president of marketing and sales.

Will Handspring create its own operating system?

"The Palm OS is a great OS and there's no compelling reason to do anything that replicates it," he said. "But it's never out of the question. We certainly have the capabilities. The three people who developed this company led Palm for six years."