What’s in a Name? Ask Palm

by Reads (19,206)

When it comes to names, few companies are as unlucky as Palm. Several years ago it was forced to abandon the name Pilot — as in Palm Pilot — when Pilot Pen Corporation claimed ownership. Now it’s being asked to leave the name Palm behind as well. While it’s not unusual for a company to change its name (in fact, Palm did it once before when it shortened its name from Palm Computing), the reason behind Palm’s upcoming name change is unique. And it has something to do with what happened to Apple Computer.

To understand the issue, let’s take a look back in time.

Palm began as a software company, making applications such as Graffiti for other companies’ handhelds, like the Casio Zoomer. Eventually Palm reckoned it could make a better handheld itself, so it created the Pilot — and the operating system software needed to run it. It was correct, and Palm quickly became the leading handheld computer company in the world.

But then Microsoft entered the picture.

Rather than build both the hardware and the software, as Palm was doing, Microsoft decided to use the approach it had success with in the personal computer market. That is, create the operating system and license it to other companies to use in their handheld computers.

Sound familiar? It certainly did to Palm, which by the way has many ex-Apple employees roaming its corridors. Apple Computer in the 1980s was much like Palm today; it built the computers and wrote the software to run them. And it owned the market. But Microsoft came along with its operating system, MS-DOS, and licensed it to computer manufacturers. The rest is history. Apple now has 3% of the market while Microsoft has gone on to become one of the biggest and most powerful companies in the world.

The similarity with Apple did not escape Palm management. So it began a concerted effort to license its operating system, called the Palm OS, to other companies — something Apple failed to do early on. Handspring, Kyocera, Samsung, Sony and others jumped on the Palm OS bandwagon and incorporated it into its handhelds. While this staved off the encroaching threat from Microsoft and established Palm OS as a platform, Palm still had a major problem. Licensees worried that Palm, as both maker of the Palm platform and user of the Palm platform, had an unfair advantage when it came to devices. So Palm addressed their concerns by dividing Palm, Inc. into two business units, Palm Solutions Group, which would make handhelds, and PalmSource, which would develop and license the Palm platform. They created a “Chinese wall” between the entities, with the Solutions Group becoming a licensee of the platform from PalmSource, just like other licensees.

But Palm realized it needed to go further to truly satisfy current and future licensees, which meant splitting the company into two independent companies. Unfortunately that raised another problem: the Palm name. Unlike Apple, Palm painted itself into a corner by having the same name for its company and its operating system. And to further complicate matters, devices were referred to as Palm Powered handhelds, a reference to the operating system.

Palm realized there was only one solution: split the company into two independent businesses, and give all rights to the Palm name to PalmSource, which it will then license to other companies.

Which leaves the Solutions Group with an unenviable task: change its name — with no reference to Palm — and hope that consumers follow. And with the PalmSource spin-off expected to be completed this fall and New Handhelds from Palm rumored for October, we expect the new name to be announced very soon — possibly even this week.

So what will be the new name? Sorry, we don’t know. But we do know that it will likely not contain the word Palm. Nor is it likely that it will be Handspring (although we’ve learned that the code name within Palm is “PalmSpring”). And we doubt that it will be Veld, a name Palm registered a year ago along with its product sub-brand names, Tungsten and Zire. (In fact, one Palm insider told Brighthand that the name Veld was in fact a bogus name meant to throw off the online media sources that thrive on rumors.)

Any guesses?

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