PalmGear Acquires Palm Digital Media

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PalmSource and PalmGear have just announced a significant business deal. As part of a new alliance, PalmGear has acquired PalmSource’s subsidiary Palm Digital Media, and will power a new PalmSource online store.

PalmSource is in the process of splitting off from Palm Inc. to become an independent company. As part of this process, PalmSource is increasing the features offered by its web site. It has chosen PalmGear to power a new online store devoted to Palm OS applications. PalmGear will provide the backend infrastructure, Palm OS software catalog, and customer and technical support to users purchasing software on PalmSource’s site.

This is a fairly typical arrangement. Both palmOne and Handspring offer software for sale on their site, with a separate company handling the actual sales. Both of these use Handango for this service.

In the split from Palm, PalmSource is acquiring Palm Digital Media, which makes the Palm Reader and distributes ebooks. It was announced today that PalmSource is going to sell this business to PalmGear. It will acquire Palm Digital Media’s existing relationships with more than 75 publishers, including industry leaders HarperCollins, Penguin Group (USA), Random House, St. Martin’s Press, Simon & Schuster and Time Warner Book Group. This will allow PalmGear to offer over over 10,000 ebook titles.

Initially, there was some question about whether PalmGear will continue to offer the Pocket PC version of the Palm Reader. Fortunately, it turns out that the fate of this application is secure. According to a spokesperson, “There are no plans to change any of Palm Digital Media’s current product offerings.”

PalmGear was one of the first sites to make a business out of distributing Palm OS applications. However, it got into financial trouble as a result of a protracted legal battle. Though PalmGear won the suit, it spent a great deal of money of legal fees. Last year PBH Holdings gave PalmGear bridge financing and took over the company’s operations, finances, development, planning, and strategic marketing.

PalmSource will soon be an independent company responsible for developing and licensing the Palm OS.

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