One of the possible solutions was rather traditional for such situations: splitting the company into two independent divisions. One would produce the PDAs and the other would develop and license (to the first as well as to other market players) the operating system. This solution worked a number of times, but also proved bad in certain situations when more efficient clone makers simply buried the main business.

Having considered all pros and contras, Palm became resolute: in early summer, they announced that the company would separate their software division. One of Palm’s executives, ex-AT&T man, David Nagel, was responsible for this process. He had been supporting this alternative of Palm’s future for months. It must have also been his idea for the software Palm division to be enforced with a purchase of a well-known company aka Be. Be was a creation of one of Apple’s executives, Jean-Louis Gassee, who wanted to develop an operating system sharpened at audio and video applications. One time it had been even considered as the candidate for the new Mac OS.

Jean-Louis Gassee

The company didn’t succeed. The OS was truly an advanced one, but didn’t find its place in the market. Thus, all the technical potential of the developers team was handed over to Palm for $11 million only. Earlier, Apple had offered to buy this company for $125 million, but the owners of Be found it too little a sum. As a result, Steve Jobs’ Next was chosen for the next Mac OS. It was a lucky draw for Palm, really.

It’s sometimes easier to change everything than just something, so the company also revealed its intentions to replace Motorola’s DragonBall processors with much more up-to-date and high-performance processors used in Pocket PC by competitors: those based on the ARM core and built by Intel, Texas Instruments or the same Motorola.

At the same Alan Kessler left the company, too. He supervised the development of the operating system in Palm and headed the Platform Solutions group, which was later made independent. He showed up in a couple of months as the head of the Intransa startup, with 3Com and Palm’s chairman, Eric Benhamou (what a coincidence!), in the administration. Well, this might have been for the better. The situation in Palm indicated that it wouldn’t be worse even if they changed  the entire management, not only the head of the software department.

As for the president and CEO of the newly-founded software department, they appointed David Nagel, and it was good. This man should know something about his job as he used to be a senior vice-president at Apple…

David Nagel

Well, I guess it’s the right time to make a short diversion and describe the role of Apple in Palm. I even leave aside the Newton project, the coinage of the word PDA itself… Just remember where Donna Dubinsky came from, who created Be and so on and so forth… Many top officers of Apple later worked in Palm. I can mention Dug Solomon, Palm’s strategy officer, and Satjiv Chahil, the company marketing director. To make the picture complete, I can even cite Steve Jobs himself, who said in the same 2000 that he’d better have bought Palm when he returned to Apple in 1997.