Palm to buy corporate wireless software op

ThinAirApps goes for $19m

Palm's Solutions Group is to buy corporate data-oriented wireless applications developer ThinAirApps in a stock-swap deal worth $19 million.

The deal comes after an attempt to buy Extended Systems - which, like ThinAirApps, develops software to hook PDAs into corporate information systems - came to nothing early last summer.

If at first you fail to succeed, try, try again. And PSG needs to succeed. It believes that the availability of a solid platform to hook corporate data into its PDAs is essential to persuade big business to roll out handhelds and to buy them from Palm.

So too does Handspring, which announced a "strategic alliance" with ThinAirApps rival Synchrologic last October. Palm too has a number of such partnerships, which essentially amount to little more than co-promotional arrangements centred on marketing each others' products to their customers.

Palm, however, intends to split in two by the end of the year, with the operating system operation going one way and the Solutions Group another. PSG needs to become something more than just one more Palm OS PDA maker, hence the move to buy first Extended Systems and now ThinAirApps. The juiciest margins are at the high end of the PDA business, doubly so if you can build hardware sales into a solution pitch, particularly when, owning both hardware and software, you can provide the lucrative service side of the deal too.

Palm can at least say ThinAirApps' offerings are tried and tested - it uses the company's software itself. The two have already been working on Palm client-side messaging, email and push software, and the purchase is as much about bringing all that development work in-house as acquiring the server component.

The timing of the deal is interesting too, coming as it does just a month or so ahead of the anticipated launch of Palm's next major wireless-enabled PDA release, the i705. That machine was to have debuted by the end of 2001, though Palm said in September that its launch had been delayed.

Presumably once Palm owns the back-end software on which it hopes to sell the i705 to corporates, it will be ready to release the new PDA. Palm confidently expects the ThinAirApps acquisition to be completed by the end of the month.

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