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PalmSource, Kyocera renew license deal

Palm's software subsidiary and handheld maker Kyocera extend their licensing relationship, but analysts are looking for new names as PalmSource prepares to go it alone.

PalmSource continues to get votes of confidence from existing licensees, but analysts are looking for the Palm software subsidiary to sign up new partners as it splits off into a separate company.

Sunnyvale, Calif.-based PalmSource and handset maker Kyocera Wireless announced Wednesday a three-year extension on a licensing agreement. Kyocera had been using the Palm operating system in its line of combination cell phone and handheld devices, which it began selling in March 2001. The company said it has sold more than 250,000 of the gadgets in North America.

Under the deal, the financial terms of which were not disclosed, Kyocera can license versions 3, 4, 5 and future versions of the Palm OS, as well as current and future PalmSource applications.

Late last month, PalmSource announced that licensee Samsung Electronics was also extending its Palm OS agreement through 2005. Samsung uses the operating system in its line of smartphones, which combine the capabilities of a handheld and a cell phone. PalmSource has 10 announced licensees and will introduce others as they have products ready to ship, according to Albert Chu, vice president of business development at PalmSource.

Analysts say that although the agreements validate PalmSource's plans to strike out on its own, the Palm subsidiary needs to sign up new licensees and expand its number of customers.

"As PalmSource looks to a future as a separate company, it's essential that they grow their base," said Alex Slawsby, of research firm IDC. "They need to diversify the products based on their platform."

PalmSource has already named its board of directors and is in a separate headquarters from the Milpitas, Calif.-based hardware group.

Rival Microsoft has 30 companies building devices for its Pocket PC 2002 operating system. The software giant and its hardware partners have also been working to offer lower-priced devices to attract a larger audience. Palm is doing the same with its new $99 Zire handheld.

The entire handheld market has been in a slump, with worldwide unit shipments declining by 3.5 percent, to 2.7 million units, compared with the second quarter of 2001, according to Dataquest, a unit of market researcher Gartner. However, Palm's operating system was the worldwide market share leader with 50 percent during the second quarter. Devices based on Microsoft's Pocket PC and other Windows CE-based software had 28 percent of the market.

PalmSource's Chu said the company is looking to three strategic areas to "mine for new business." It will continue trying to develop the corporate market for devices using its operating system. It's also focusing on the wireless market, including networking technologies. And it hopes to make headway in new regions of the world, most notably China.

In separate news, Kyocera Wireless announced on Wednesday a new handset, the Kyocera 3225, which uses the BREW operating system. The 3225 comes with position-location technology and can access high-speed wireless CDMA2000 1X networks.