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Sun set to announce partnership with Palm

The Java creator and server giant plans to announce a partnership tomorrow that aims to make the Palm handheld device into a more useful tool for the office, sources say.

On the eve of Palm Computing's initial public offering, Sun will announce a partnership with the company tomorrow that aims to make the handheld device into a more useful tool for the office, sources said.

The partnership, to be announced tomorrow at the Wireless 2000 show in New Orleans, will make it easier for people on the road to use Palm handhelds--rather than cell phones, pagers or laptops--to tap wirelessly into computer networks.

"Palm is hot. It's a good time to do something like that," said Goldman Sachs securities analyst Laura Conigliaro. Networking company 3Com is spinning off Palm Computing, with an IPO set to take place Wednesday with public trading expected Thursday.

The deal is important for both companies as they try to expand from their established strongholds onto less certain ground. For Palm, the deal could accelerate the company's efforts to transform wireless communications through a handheld from a curiosity to a daily business addiction. In addition, a tie-in with Sun could help Palm Pilots become more tightly integrated into the corporate computing infrastructure.

Sun, meanwhile, is trying to tap the growing business for building or providing equipment for integrated wireless, telephone and data networks. The company announced new telecommunications deals today with BellSouth, GTE and Lucent Technologies.

"Even now, before all these deals start to get traction, Sun's (telecommunications) business has been its largest target market," said Conigliaro.

Sun and Palm representatives didn't respond to requests for comment today.

The partnership expands on earlier ties between Sun and Palm. The two companies are working to bring Sun's Java software to Palm Pilots, which would ease software development. Sun began offering consulting services in October to help companies fold Palm Pilots into corporate computing operations.

Though wireless Internet services aren't yet widespread, companies are furiously working to secure a lead. America Online, for example, today announced multiple deals and programs to spread its popular instant messenger software to cell phones. AOL and Sun, as well, have separately been working on development projects.

In other telecommunications deals today, Sun signed a deal with Lucent to power an upcoming Lucent service that will translate email to speech and vice-versa, the companies said. Ideally, consumers will be able to search computer databases through a phone call or dictate a message that gets transformed into a written email or page.

Lucent's Bell Labs developed the software and Lucent will offer it later this year. Lucent will use Sun servers running Sun's iPlanet message and calendar software for the service, a Sun representative said. Lucent and Sun already are allies: In December, Lucent agreed to buy as much as $500 million worth of Sun hardware.

In addition, GTE has successfully begun replacing its older Honeywell mainframe computers with Sun servers in the system used to keep track of what services, such as caller ID, GTE customers use, Sun said. Sun sold the firm 15 of its high-end E10000 "Starfire" servers for the task. Typically, Starfires cost about $1 million, and GTE is expected to purchase more in the future.

Sun also announced a deal with BellSouth to jointly build wireless services with Sun back-end hardware and Sun's Java software on the gadgets used to tap into the services.

Palm is also looking to tap other markets. After conquering the consumer market and achieving 70 percent market share in hand held computers, Palm has set its sights on corporate customers. The company's plan, to leverage its user base of executives and mobile professionals who had brought their Palm devices into the enterprise, has met with some challenges thus far.

Although Palm unveiled server software earlier this year which allows users to synchronize their devices directly with company servers, some analysts have noted that Palm has a way to go to get its services and support groups up to handling large corporate accounts.

Palm is also aggressively expanding its wireless offerings, mainly through its licensing efforts. The Palm VII wireless device and accompanying Palm.net service is widely seen as a niche product--albeit a popular one--and the company has acknowledged that its wireless efforts will primarily focus on partnerships with handset manufacturers and other device makers.

Already, the company has struck deals to put its software on phones from Nokia and Motorola, and Sony is expected to use Palm software on its upcoming multimedia device. But Palm faces competition from Microsoft and the Symbian alliance, which are also developing software which will run Internet-enabled cell phones.

The stakes for this market, which is seen as the next battleground for device makers, are particularly large: Lehman Brothers recently predicted that by 2007, half of all cell phones sold worldwide will be these "smart" phones.

News.com's Stephanie Miles contributed to this report.