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Palm/Handspring offshoot strong wireless competitor

Palm/Handspring offshoot strong wireless competitor

Enterprise users and industry analysts see Palm Inc.'s acquisition of Handspring Inc. as a smart move that will result in a combined company that's better able to compete in the mobile and wireless marketplace with rivals such as Microsoft Corp. and cellular telephone manufacturers.

Palm announced Wednesday that it's buying Handspring in a stock-swap deal worth about US$169 million.

Gail Browder, executive vice president for products and services at PHT Corp. in Charlestown, Mass., which has fielded "tens of thousands of Palm devices" over the past year to support clinical trials it runs for drug companies, said the Palm/Handspring combination will result in "a bigger player" that's more competitive.

Browder emphasized that bringing Jeff Hawkins, who founded Palm before moving on to hatch Handspring, back into the Palm fold will also help the company "stem the perception of brain drain" that occurred when he left. Hawkins, who is now Handspring's chairman and chief product officer, will be the chief technology officer of the merged company.

Browder added that in her view, Handspring -- which has concentrated sales efforts on its Treo handheld with integrated wireless capabilities -- will offer Palm expertise in building handhelds with integrated wireless, something she sees as essential to businesses like PHT.

Sam Bhavnani, an analyst at ARS Inc. in La Jolla, Calif., said Handspring will provide Palm with something it has sorely lacked: strong partnerships with major U.S. cellular carriers. Bhavnani said Handspring has partnerships to sell the Treo through three cellular carriers: Cingular Wireless in Atlanta, Sprint PCS Group in Overland Park, Kan., and the Bellevue, Wash.-based T-Mobile division of Deutsche Telekom AG. Palm, in contrast, has a sales and marketing partnership only with AT&T Wireless Services Inc. in Redmond, Wash.

Bhavnani views Handspring's carrier relationships, which take time to build, as the most important intangible asset Handspring brings to the combined company.

Dan Wilkinsky, a spokesman for Sprint, called partnerships between device manufacturers and carriers "absolutely vital" because phone and handheld vendors no longer develop products with the expectation that carriers will sell them. Instead, carriers need to work with vendors who can develop products that are "integrally woven" into a carrier's strategic plan. He described Handspring's Treo "as a real winner for us."

The combined company should be able to offer a broad line of products that are better able to compete with Microsoft's, Bhavnani said, especially since that company is "a little behind" in sales of its Smartphone. Since the Treo combines voice and data into one device, the new Palm will also be in a better position to compete with cell phone handset manufacturers, which are now beefing up the data capabilities of their phones, such as Nokia Corp.

Alex Slawsby, an analyst at IDC in Framingham, Mass., said the Palm/Handspring deal indicates that the "handheld industry is no longer device-centric," but rather is focused on companies that can deliver wireless capabilities.

While the combined company will have scale that the two partners now lack, Microsoft currently holds the lead in the enterprise market, with its clear focus on enterprise users with products such as the Pocket PC, he said.

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More about ARSAT&TAT&T WirelessCingular WirelessDeutsche TelekomHandspringHatchHawkinsIDC AustraliaMicrosoftNokiaSprintSprint PCST-Mobile

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