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Palm stakes software upstart

The device maker makes an investment in Mobile Digital Media, a company focused on distributing content to handhelds using expansion cards.

Handheld maker Palm announced an investment Tuesday in software start-up Mobile Digital Media.

As previously reported, Mobile Digital Media plans to focus on developing and distributing content on the Secure Digital (SD) and MultiMediaCard (MMC) expansion cards used in Palm and other handhelds.

Barry Cottle, former Palm co-chief operating officer, will be CEO of the privately held company; former Palm Chief Marketing Officer Satjiv Chahil will be Mobile Digital Media's chairman. Chahil also serves on the board of PalmSource, the unit of Palm that develops and licenses the Palm operating system.

"The adoption of SD/MMC is really exploding," Cottle said in an interview, adding that he expects the number of devices with such expansion slots to grow from the couple million devices that were on the market earlier this year to 300 million in the next four years.

The 13-person company, based in Mountain View, Calif., will assume responsibility for publishing software under the PalmPak brand, the name Palm has used for the SD and MMC cards it has sold. The company lists several products on its Web site, including a collection of games for the Palm, a language translator card and a travel guide featuring content from Lonely Planet.

Palm is taking a minority stake in the new company. But Cottle would neither specify how much Palm put in nor identify the company's other investors or disclose the total size of Mobile Digital's financing.

Although Mobile Digital is starting off by publishing other people's software, Cottle acknowledged that the company will need to get exclusive titles in the future.

"Content is king," Cottle said. "If you are just taking existing content and publishing (for) the handheld, there is no unique IP in that."

Cottle said the new venture would expand from SD/MMC cards for the Palm and eventually would work to publish content for other operating systems, such as Microsoft's Pocket PC, as well as into other types of distribution, such as wireless downloads or publishing for Sony's memory stick expansion media.

Aside from its stake in Mobile Digital, Palm has an internal unit, known as Palm Digital Media, that markets electronic books that are stored on SD cards. That unit is now a part of PalmSource, the Palm subsidiary that develops and licenses the Palm Operating System.

Separately, Palm on Tuesday completed a 1-for-20 reverse stock split, and because of the split, Palm will trade under the ticker symbol "PALMD" for the next 20 days.

Shares of Palm were up 20 cents, or 1.56 percent, at $13 in midday trading.