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PalmSource CEO: Dell doesn't worry us

Dell's entry into the handheld market will "have an impact," says PalmSource chief David Nagel--but not enough to crush Palm's hold on the niche.

    LONDON--The head of PalmSource, the software arm of Palm, has spoken out against a Wintel-based clone model for handheld devices, but he admitted Dell Computer's imminent entry into that market will "have an impact."

    PalmSource CEO David Nagel was in London to promote the Palm OS 5 operating system for mobile devices. "Dell certainly will have an impact in the handheld computing market...but mainly because of their distribution and sales (expertise). They will bring Microsoft Pocket PC pricing closer to that of Palm (OS-based devices), but even Dell can't close that gap completely."

    PalmSource will soon announce that it is licensing its operating system to several more hardware companies, Nagel said, although he wouldn't be drawn on whether Apple--where Nagel was once head of R&D for the Mac and Mac OS--and Legend, China's largest PC vendor and a key bridgehead into that giant market, are on that roster.

    Nagel allowed that some of PalmSource's new licensees will also have signed up to the operating system's two main competitors--Microsoft's Pocket PC and Symbian, which is backed by the major mobile phone makers and mainly used on smart phones.

    Though Dell is staying loyal to Microsoft, Nagel said, "There is a reticence (on the part of manufacturers) to commit to a single platform."

    While the overall market for PDAs (personal digital assistants) has been flat for a year or more, PalmSource says its share of the market has remained steady and it has by far the most users by units shipped. The PalmSource operating system company is almost completely separated from Palm the hardware company.

    Although analysts have said vendors that use the Palm OS must sell less expensive devices to survive--for example, Palm's high-end Tungsten T device, the first to use Palm OS 5, comes in at $499 even if the company also now sells a sub-$100 Zire handheld--Pocket PC-based devices are generally more expensive.

    Dell's debut will see Pocket PC-based devices drop below the $300 mark in the United States, but PalmSource's Nagel stressed he believed his company will prosper in spite of this price pressure and in spite of Microsoft, which he said loses money on each Pocket PC device sold.

    As reasons, he cited the ease-of-use of Palm software, Palm's commitment to Java, the new OS 5--which supports fast, ARM-based processors, an area where Microsoft has had a lead--and a strong and growing developer community.

    Nagel's main message, however, was that Microsoft will back a market of clone, Wintel-based handhelds, whereas Palm is looking at allowing manufacturers to maintain profit margins through various types of specialized devices.

    Silicon.com's Tony Hallett reported from London.