PalmSource Buys into Linux with China MobileSoft Deal

Analysts praised the move. "PalmSource will greatly extend its reach in both the low-end feature phone market and the highest end of the smart-phone market, bringing Palm's ease-of-use to a broader audience," Carl Zetie, vice president, Forrester Research, told LinuxInsider.

Into an Expanding Market

The action gives PalmSource reach in an expanding market as well, said Stacey Quandt, senior business analyst, Robert Frances Group.

"The combination of PalmSource's user interface, application portfolio and the ability to leverage Linux on a mobile device broadens the market opportunity for PalmSource in China and the rest of the world," she said. "Currently Motorola has shipped half a million mobile phones in China running Linux."

PalmSource competitors include OpenWave, J2ME and BREW at the low-end; Microsoft (Nasdaq: MSFT) (Smartphone or Pocket PC) and Symbian in the middle; and existing Linux platforms such as OpenPDA at the high end. But Zetie said PalmSource will be the only one with offerings across the board.

"PalmSource is now positioned as a single source for the entire range of a carrier or handset maker's needs," said Zetie. "This announcement not only enhances PalmSource's viability by ending speculation about the risks of depending only on the PDA and high-end smartphone markets, it should also put an end to concerns that palmOne might abandon PalmSource for a Linux platform in the future."

OS Will Not Be Open-Sourced

The company made clear that it would not be open sourcing Palm OS, but would be selling it as a software layer atop Linux. Development tools will remain free and developers will not be charged to create applications for the OS.

"While we're not open sourcing all of Palm OS, we do expect to open source some of our code, and will actively seek to invest in the open-source community through code contributions and other means," Mike Kelly, PalmSource vice president of engineering, said in a statement.

China MobileSoft makes mobile phone software and has been working on a Linux version designed for smartphones. To buy the company, PalmSource will issue about 1.57 million shares of stock in exchange for outstanding CMS stock. The deal is subject to shareholder approval, but both companies said they expected it to be finalized before the end of February.