Handspring had entertained good relationships with cell operators. During the first month and a half, there were about a dozen operators supporting and offering the Treo to their subscribers. Among the operators were quite big companies like Sprint. However, this was a move for the future rather than for an immediate effect. The financial results for the previous quarter told that since the beginning of the year, Handspring lost about $23.7 million with sales amounting to $59.7 million only. It was twice as low as in the beginning of 2001! So, it was not a great surprise for the company’s CFO, Bertrand Whitney, to retire in order to “spend more time with his family.”

But again, nothing new can make miracles immediately. The financial results were indicative of the company’s weakness in the PDA market rather than its failure in the communicators market. The situation there was pretty good. The Treo was selling even better than anticipated. For the sales to become mass and tell on the financial health of the company, they needed some time. Meanwhile, Handspring boosted its potential further by launching a couple of new models: the Treo 270, a full-fledged device with 16MB of memory and color display, and the Treo 90, a communicator without … the wireless modem. It had one more peculiarity – an ordinary SD Card slot like in the last Palm models instead of the proprietary slot called Springboard. This made sense – a commonly accepted technology is always better.

But back to Palm. The dramatic reshuffle within the company about half a year ago finally led to the first results. The quarterly financial report mentioned a profit of $2.9 million with sales of $292.7 million. Palm was again on the rise! (Well, it was not exactly so. They listed among the profits the money received from the sold subsidiaries that were previously listed among the losses). By the way, it was the first report of the software division financial results. PalmSource earned $19.5 million with $11.7 million coming from the biggest PalmOS licensee… Palm! In fact, if PalmSource had been fully independent, it would have ended the quarter with about one million dollars loss.

Nevertheless, PalmSource had bright prospects as everyone agreed. For example, in 2001 only, the sales of software for Palm increased by three times, while the company itself was busy writing the fundamentally new version of its operating system, PalmOS 5. It was initially oriented at ARM processors – Palm’s new choice. The invasion into the corporate market was underway, too. They made a client for VPN networks, included Java support, contracted IBM to write a client for access to its e-commerce WebSphere servers…

Besides, they were still preparing for making PalmSource truly independent. This division received an independent board of directors with Eric Benhamou as director, David Nagel as CEO of the division (sounds ambiguous, but that was true), Jean-Louis Gassee, and a couple of others.

Table of contents: Part I     Donna Dubinsky     Ed Colligan Part II Part III