The failure of PalmSource and Access, Co, Ltd. to meet contract obligations may result in the termination of Palm Inc's involvement in the development of a future Palm OS successor.
Last year, when Palm renewed its license to use Palm OS in its products, the company established a schedule of "minimum royalty payments" that would entitle the company to full use of the Palm OS intellectual property. These were $42 million for 2006, $35 million for 2007, $20 million for 2008, and $10 million for 2009.
All these payments after 2006 were subject to a co-development agreement, which required PalmSource to meet certain unnamed development milestones.
Now, in Palm's newly released annual report, is a note that PalmSource and its new owner Access have failed to meet the established milestones. This has the effect of voiding Palm's agreement to make the minimum payments to PalmSource after December 2, 2006.
The annual report goes on to mention that Palm is negotiating with PalmSource to "expand our development and distribution rights to the current version of the Palm OS. If we are unable to successfully conclude these negotiations, it may adversely affect our ability to develop and distribute new products based on a next-generation version of the Palm OS."
What this portends for Palm's future plans isn't clear, but it certainly is a major blow to the future of the Palm platform. While it's reasonably certain that Palm will continue shipping products based on the current Palm OS Garnet even if the development license does run out, a serious disagreement between the two companies could doom any plans for a new Palm OS successor.
These events may also hint at a broader rift between Palm and Access. Since PalmSource was bought out, Palm has not mentioned or commented on, in any significant way, the Access Linux Platform that the company has been designing.
Is Palm Developing It's Own OS?
Speculation has been rampant that Palm is developing their own Linux-based operating system, but certain portions of the annual report would seem to indicate that this isn't the case: rather, that Linux coders were hired early on as part of joint development operations with PalmSource.
An alternate interpretation is that Palm Inc.'s own development is dependent on intellectual property still owned by PalmSource, and that without this they cannot continue their own projects, which might include a more "classic" version of Access Linux.
Either way, this is a crippling and potentially fatal blow to any kind of future Palm OS development.
Read Palm Inc.'s 10-K filing can be found on its web site.
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