ACCESS buys PalmSource. Who!?

Considering that the (pretty exciting) rumour barely a week ago was that Palm (the hardware company) might acquire PalmSource (the software company) it came a bit of a surprise (more like a shock) to learn today that a (pretty unknown) Japanese company called ACCESS had stepped in to buy PalmSource instead.  This is not exactly the White Knight that some may have been hoping for to ‘rescue’ PalmSource but there may nonetheless be some very positive points.

For starters, ACCESS has acquired PalmSource for $324 million in cash –$18.50 per share or an 83% premium over the $10.09 closing price yesterday – so the company evidently has the financial resources to invest in the continued development of the PalmOS.

Business Week reports that “Tokyo-based ACCESS markets the NetFront Internet browser, widely recognized as one of the most advanced Internet browsers, and provides Internet technologies to mobile and other markets.  NetFront technologies are being used in next-generation mobile devices and consumer electronics products, including digital TV’s and Net-linking functions in cars called telematics”. 

The list of ACCESS’ major customers, alliance and cooperative partners is indeed impressive.  The fact that it offers solutions for all the major mobile operating systems – PalmOS, Symbian and PocketPC/Windows Mobile – is undoubtedly a big plus and one that will be enhanced by PalmSource’s ongoing Linux efforts.  Additionally ACCESS is already working with many of the world’s largest handset manufacturers – Nokia, Motorola, Panasonic and Sony Ericsson among others. 

The even more interesting fact is to see how ACCESS has been active in the consumer electronics field as well – an industry that is in dire need of a robust and versatile operating system to power all of their devices in an increasingly digital converged world and complement their already excellent hardware design and manufacturing capabilities. 

As I have mentioned in the past, I believe that the potential of using the PalmOS in this area has been almost completely overlooked and the proven business relationships that ACCESS has established with leading Japanese consumer electronics companies such as Sony, Panasonic, Toshiba, Nintendo and Sharp could clearly be leveraged.  PalmSource for its part will bring the two other Asian mobile and consumer electronics juggernauts to the table with licensees Samsung and LG Electronics.

However, developing and selling an advanced browser which ACCESS has been doing to date is considerably easier than managing the development of an operating system and a community of over 400,000 application developers.  On the other hand, PalmSource itself had been making increasingly dismal moves in both these areas with very slow progress on its new OS and providing an almost complete lack of leadership, vision and strategy to its developer community which has grown increasingly frustrated and disappointed with the company.  One could therefore argue that any change will be positive and provide the opportunity for everyone to move forward with a fresh start.

Palm for its part has been publicly positive about ACCESS’ acquisition.  In a press release, Ed Colligan, Palm, Inc. president and chief executive officer said, "Palm's award-winning user experience and application expertise, combined with ACCESS' leading software development capabilities, will allow us to continue to deliver great products for our customers. ACCESS is currently a software technology partner and we look forward to continuing our strong working relationship to advance the Palm OSR platform." 

Evidently Palm doesn’t think that owning the OS is critical otherwise it would have acquired PalmSource itself.  As Palm has mentioned in the past, it has already brought the most significant software development in-house – particularly that of our Treo.  Nevertheless, from a cultural and emotional perspective it must nonetheless be difficult for Palm to now see PalmSource acquired by a third party.

I remain extremely excited about the PalmOS and the future opportunities that it offers and I truly hope that ACCESS will be able to fully exploit these – we’ll have to wait and see what happens in the coming months.

ACCESS to Extend Leadership in Mobile Device Software with Acquisition of PalmSource [PalmSource Press Release]
Japan’s ACCESS acquires PalmSource [BusinessWeek]
Palm and PalmSource...Together Again? [PCWorld]

Treonauts will always support the PalmOS…