Handheld manufacturer Palm has announced that it is to acquire rival equipment maker Handspring. The transaction is expected to close in the autumn, subject to certain conditions. The move comes at a time when the global handheld market is declining.
Although still the market leader, Palm faces a number of tough challenges such as increasing competition from other manufacturers, the encroachment of the newer Smartphone sector on its market, in addition to declining IT budgets.
Handspring was established in 1998 by former Palm executives Jeff Hawkins and Donna Dubinsky. The company made an early niche for itself by selling low cost devices running the Palm operating system. Of late it has entered the mobile phone hybrid market, making much of the early running in this area with its Treo model. However, Handspring has been troubled by continuing losses.
Palm consists of two businesses: PalmSource, a subsidiary responsible for developing and licensing the Palm operating system, and the Palm Solutions Group, a business unit responsible for designing, making and marketing handheld devices. Immediately following the completion of the spin-off, Handspring will be merged with Palm, and the merged company will be renamed later in the year.
Palm has also announced that PalmSource is to be spun off into a separate company. The spin-off of PalmSource will be completed immediately prior to the closing of the Handspring acquisition.
By Dick O’Brien
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