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-- Palm OS liscence to handspring (http://discussion.visorcentral.com/vcforum/showthread.php?threadid=10291)

Posted by MrSuicide on 12-22-2000 11:37 PM:

Now, im jsut curious to handspring and all other Palm OS based platforms's future.

What is stopping palm from basically NOT liscencing out palm OS and doing like Apple did. Palm could benifit from this (no competition) and would not take the dive that apple took because palm is still the leader in the palmOS world. WOuldnt this basically end handsrping? and all other palmOS based handhelds?

Im just curious because im thinkin of investing, and this question just popped into my mind.


Alan

Posted by BaseMan on 12-23-2000 12:01 AM:

I remember hearing something about a year ago when Handspring first started shipping, and this same question came up, that Palm views themselves as an OS manufacturer versus a hardware manufacturer. The economies of scale are much larger when you're licensing software versus manufacturing and distributing hardware. If I were Palm, I'd license the Palm name, hardware design, and manufacturing to another company and get out of the hardware biz altogether, then sit on the Palm OS licenses while getting into PalmOS app development (sound like another company to you?)

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Posted by MarkEagle on 12-23-2000 12:17 AM:

The original license agreement between Palm and Handspring was for 5 years if I'm not mistaken. So, we're ok for at least another 4

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Posted by dpdamour on 12-23-2000 03:16 AM:

quote:
Originally posted by MrSuicide
What is stopping palm from basically NOT liscencing out palm OS and doing like Apple did. Palm could benifit from this (no competition) and would not take the dive that apple took because palm is still the leader in the palmOS world. WOuldnt this basically end handsrping? and all other palmOS based handhelds?

Palm would end up suffering the same fate as Apple ... becoming number two.

At one time Apple was the number one producer of consumer micro-computers. There were techie-oriented micro-computers but there was no consumer market until Apple came along.

Then a company called International Business Machines decided to produce a device call the "IBM Personal Computer" targeted at the small-to-medium size business market. IBM chose an operating system by a little known company called Microsoft. Microsoft licensed the same operating system to other hardware manufactures.

Apple watched as it's market share shrank. Other manufacturers wanted to produce Apple clones but Apple refused to license it's OS to these companies. Today, many consider Apple to be a niche market.

Today, Palm is in the same position as Apple was back in the 80's. Also, the 80's David-size Microsoft has become today's Goliath. While Microsoft's WindowsCE devices died a tragic death, it's PocketPC devices are going to be serious contenders.

I would hope that the Palm execs acknowledge that they cannot hold the PDA market on their own. The only hope for their continued success is to have the PalmOS on as many PDAs as possible; whether they are Palm Inc devices or that of a competitor.

=Dave=

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Posted by MarkEagle on 12-23-2000 03:24 AM:

quote:
Originally posted by dpdamour
The only hope for their continued success is to have the PalmOS on as many PDAs as possible; whether they are Palm Inc devices or that of a competitor.


I seem to recall reading a while ago that Palm made as much, if not more, per unit on OS licenses as it did on their own handhelds. Either way, they make money.

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Posted by TOYboy on 12-23-2000 12:50 PM:

Like one of the other poster above said, Palm is interested in becoming a OS supplier. Maybe the Microsoft of PDAs?

Posted by MarkEagle on 12-23-2000 02:46 PM:

quote:
Originally posted by TOYboy
Palm is interested in becoming a OS supplier.


I'd like to see Jeff Hawkins and company come up with a killer handheld OS. Who better to do it than the father of the PDA as we know it today?

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Posted by iluvblue on 12-23-2000 05:28 PM:

I read somewhere that they make/charge $13 per license with Handspring and Sony. That is about the same margin as they would make if they sell their own devices. Palm weren't stupid when they licensed the OS out if this info is correct.

Posted by MarkEagle on 12-23-2000 05:59 PM:

quote:
Originally posted by iluvblue
they make/charge $13 per license


Hmmm... and Handspring just passed the one million unit mark. Makes for a nice piece of change, don't you think?

I also think that Jeff and Donna are the ones that put the licensing strategy in place prior to leaving Palm. They must have known they could build a better mouse trap.

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Posted by BaseMan on 12-28-2000 12:34 AM:

Very interesting article on Anywhereyougo.com that talks about this very subject...

http://www.anywhereyougo.com/ayg/ay...e.po?id=1714681

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Posted by dhodory on 12-28-2000 02:34 PM:

Simple economics really. Manufacturers should produce to the point that marginal costs = marginal revenue. In the case of software (especially licensing) what is marginal cost? 0 or approaching 0.

Think of it this way. What does it cost Palm to sell the license? Nothing. What is the risk? If the competing platform fails, does it impact Palm hardware sales? No. The real key piece of info here is how much Palm makes on their hardware units, if the "net" is less than the licensing charge (less some probability percentage of actually selling units) -- sell the licenses. Smart business.

Posted by septimus on 04-11-2001 02:17 PM:

Looks like it's just been renewed/extended, for a long time. If HS is going to support another platform, looks like they'll have 2. Till 2009, Jeez!

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Posted by Toby on 04-11-2001 03:59 PM:

quote:
Originally posted by iluvblue
I read somewhere that they make/charge $13 per license with Handspring and Sony. That is about the same margin as they would make if they sell their own devices. Palm weren't stupid when they licensed the OS out if this info is correct.


ISTR the recent Business 2.0 article I read stated it as $8 per unit.

Posted by Hoser_back_home on 04-11-2001 04:38 PM:

i've also read that the licensing profits only make up about 10-15% of their total profit (i think that number is right, but i remember it being down there somewhere) which should give you a pretty good idea on profit margins considering the number of units palm has sold when compared to handspring or Sony.

i think the true income from licensing the OS will come from cellphones adapting it for their uses.....100's of millions of cellphones vs. millions of PDA's

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Posted by bookrats on 04-11-2001 05:14 PM:

Exclamation

quote:
Originally posted by MarkEagle


I'd like to see Jeff Hawkins and company come up with a killer handheld OS. Who better to do it than the father of the PDA as we know it today?


Reading the press release about the Palm OS renewal, I'm wondering to what degree Palm is at the steering wheel of it's own OS. The way I read it, several of the newer Palm OS features (USB synching, 16-bit color) that have wound up in Palm OS 4.0 came from Handspring.

I assumed a couple of months ago that Handspring would be coming out with their own OS. However, there was one possibility I hadn't considered: what if Palm is letting Handspring co-develop the Palm OS with them? I.e., Handspring can add new features in "H" versions of the Palm OS released in Visors, and then moved into the mainstream Palm OS releases a few months later; or that they're directly feeding improvements to Palm for their OSs.

I know -- it seems unlikely for two companies that compete so directly in hardware to work that closely in software. I'm just speculating. But Handspring's renewal of the Palm OS has two major points:

1) It means that Handspring isn't splintering the gigantic Palm OS majority that dominates the PDA market right now.
2) I assume this means that Handspring is pretty certain that they can get whatever major features they want from the Palm OS.

It would be interesting to look at the fine print of that license renewal contract.

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