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Tapwave exits game device business

Maker of the Zodiac handheld device business discontinues sales, leaving PalmSource with one less customer.

Tapwave shut down its Zodiac handheld device business this week, meaning one less customer for struggling PalmSource, maker of the Palm operating system.

Tapwave, which sold the Zodiac gaming devices with organizer features, posted a notice on its site that it was discontinuing sales, service and support as of last Monday. It said that liquidation specialist Uecker and Associates will be contacting anyone with outstanding claims against the company.

The privately held gaming device maker debuted its Zodiac handhelds two years ago, as it sought to find a niche in the struggling PDA (personal digital assistant) market. As part of this effort, Tapwave partnered with PalmSource to carry its operating system on its devices.

Although the demise of Zodiac is not expected to dramatically dampen PalmSource's shipments, it will nonetheless have a significant effect in other ways, said Richard Shim, an IDC analyst.

"From an influence standpoint, it hurts PalmSource," Shim said. "They pointed to Tapwave as an example of applications of the Palm OS outside of handhelds."

PalmSource is facing a shrinking market for handhelds, and Tapwave provided customer diversification for its partner.

PalmSource "is losing a licensee that doesn't play solely in the organizer market," Shim noted.

Last year, PalmSource was dealt another blow when Sony announced it would discontinue sales of its Clie handheld in U.S. and European markets. Clie was another PalmSource customer that went beyond basic organizer features, offering a multimedia handheld.

Tapwave and PalmSource representatives were not available for comment.