Dennis Kennedy

Jeff Beard, National Practice Group Technology Liaison at Quarles & Brady and one of my "go-to people" on almost any legal technology issue, had a great analysis on the Palm / Handspring merger announcement and its implications. Take it away, Jeff:

"Palm to Acquire Handspring

Yes, after all the rumors and denials, it finally happened. See http://www.palminfocenter.com/view_story.asp?ID=5479. The new company will be renamed later this year. Just as long as it isn't Palm Springs -- I believe that one's already taken. ;^)

This is actually very good news, IMHO.

During one of my Techshow presentations in April, when asked about the Treos, I expressed concerns over Handspring's long term viability as a separate entity. I said within 12-18 months they would either be in bankruptcy or acquired at fire sale prices. The reason for this was their cash burn -- they were losing $15-$20 mil per quarter, and only had $50 mil left in cash reserves (that's after a huge restructuring charge wiped out half their reserves). Doesn't take a math whiz to see they only had a few quarters left. Frankly, despite their continuing innovation, Handspring was just too small. They didn't have the resources to weather the storm, nor to make the huge push required to market the Treos sufficiently.

But this move strengthens both Palm and Handspring to compete against Sony and PocketPCs. Over the past 6 months, Palm finally released organizers that made me sit up and take notice, especially the latest two Palm OS 5 models (Zire 71 and "C", the latter with WiFi built-in). Before that, they just weren't innovating at all, just marginal improvements, big yawn. Everyone kept asking when Palm would release a smartphone. Their first offering, the Tungsten "W", didn't cut it by any means as a cell phone replacement.

Meanwhile, Handspring had been winning kudos all over with the Treos, especially the Treo 300 via Sprint's new and faster network, while phasing out their organizer line (Visors). So now their lines are sufficiently distinctive that they won't be competing against each other directly. And this is most likely the death knell for the Visor line. If Palm is smart, they'll axe the aging Visors and further develop the Treos to add Palm OS 5 and 6 support, and make them flash upgradable (currently all Treos run Palm OS 3.5, aren't upgradable, nor do they have a memory card slot). And the Treo finally gives Palm an entré into the enterprise market, but only if they approach it right. Both companies have fumbled the ball repeatedly in that market.

This is probably the best timing possible both financially and technically. I'm just glad that the Treos found a home. We had been considering them as part of our firm's mobile tech solutions, but Handspring's continuing financial deterioration caused justifiable concern about buying into a dead end. While the acquisition is no guarantee, I'm thinking it should extend the combo device line another year or two, perhaps more if we're lucky."