Mobile browser-maker Access Co. Ltd. announced Friday that it will acquire Palm OS developer PalmSource Inc. in an all-cash transaction for approximately $324 million. The acquisition adds operating system platform expertise and Linux development resources to Access's existing mobile device-oriented “content delivery and Internet access software,” the companies said.

Widely deployed embedded browser

Access's NetFront browser has been widely deployed in mobile phones, PDAs, set-top boxes, digital TVs, automotive telematics systems, and other Internet devices, according to the company. NetFront v3.3 features enhanced DHTML support, frame handling, pop-up blocking, and RSS (really simple syndication), as well as support for Atom Feed, international domains, encryption, and password management.

Access claims that NetFront has 150 million deployments in 342 unique devices from 90 manufacturers, making it perhaps the world's most ubiquitous embedded browser. It supports Linux, Palm, Symbian, Windows Mobile/PocketPC, BREW, and other embedded operating systems.

PalmSource's Linux fortunes

PalmSource announced last December that it planned to offer PalmOS as a middleware and application stack for Linux mobile phones. “PalmOS for Linux” would target smartphone manufacturers in China, initially, it said. Additionally, the company announced that it had acquired successful mobile phone application software startup China MobileSoft, to help it gain a foothold in China.

PalmSource has struggled for the last year, after failing to interest PDA and phone vendors in Cobalt, its attempt at a multi-tasking successor to the venerable Palm OS. Long the marketshare leader for PDA OSes, Palm OS was supplanted in 2004 by Microsoft Windows CE in 2004, according to Gartner.

At the same time, Palm OS benefits from a robust third-party software ecosystem and a tremendous amount of legacy vertical market software — the single most important factor in PDA buyer considerations, according to Handango.

Another bright spot for PalmSource has been industry reaction to the news that the company would embrace Linux, transitioning its Garnet and Cobalt APIs to libraries running on top of Linux. PalmSource executives Michael Kelley and John Cook said that the news actually increased interest in Cobalt, as well as doubling the number of attendees expected at the company's annual developer conference this year.

PalmSource announced a restructuring in July, with interim CEO Patrick McVeigh saying that projects not directly related to Linux mobile phones would be cancelled or put on hold. The company additionally announced a partnership with MontaVista at LinuxWorld earlier this month.

Some industry pundits said early on that PalmSource's embrace of Linux could hurt Palm (recently renamed “Palm” from “PalmOne”), a hardware company marketing Palm-brand handheld devices. Palm's recent LifeDrive, the company's first PDA equipped with a hard drive, runs PalmOS Garnet, not Linux. However, an impending version of its highly popular Treo PDA phone could be based on Windows Mobile, not Palm OS, according to rumors.

PalmSource completed its $16M acquisition of Chinese Linux phone designer China MobileSoft in February of this year.

Linux-based platforms for mobile devices

“PalmSource's earlier acquisition of China MobileSoft, a developer of Linux technology, provides the foundation to promote Linux-based platforms for mobile devices,” said Access CEO Toru Arakawa. “By combining Access's robust NetFront browser platform and its proven business relationships with PalmSource's advanced operating system, application portfolio, user interface, and developer communities, we will be able to produce a comprehensive yet flexible solution for the mobile market.”

“We are very excited about joining forces with Access to help create a leading provider of software for the mobile market,” added PalmSource interim CEO Patrick McVeigh said. “We believe the customer and technology synergies of the combined companies will open up new market opportunities for both companies worldwide.”

Palm Inc president and CEO Ed Colligan said, “Palm's award-winning user experience and application expertise, combined with Access's leading software development capabilities, will allow us to continue to deliver great products for our customers. Access is currently a software technology partner and we look forward to continuing our strong working relationship to advance the Palm OS platform.”

The $18.50 per share tender represents an 83 percent premium for PalmSource stockholders based on PalmSource stock's market closing price of $10.09 on September 8, 2005. The merger has already been approved by the board of directors of both Access and PalmSource, according to the companies. The acquisition is expected to be completed by the end of 2005.

Related stories — PalmSource:

• MontaVista and PalmSource share Linux mobile phone party line
• PalmSource re-org puts Linux phones first
• Apps drive mobile device purchases, loyalty
• Executive Interview: Michael Kelley and John Cook of PalmSource
• Open letter from PalmSource to the Linux community
• PalmSource affirms Linux commitment
• Palm's new LifeDrive has 4GB HDD — but where's the Linux?
• PalmSource joins Consumer Electronics Linux Forum
• PalmSource debuts Linux mobile phone software platform
• PalmSource closes in on Linux smartphones
• PalmSource jumps on Linux for mobile phones

 
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