New Palm CEO to Lead Separate Software Subsidiary

David C. Nagel, 56, joined handheld computer maker Palm, Inc. on September 17, 2001, as president and CEO of its Platform Solutions Group, which Palm indicates will become a wholly owned subsidiary by the end of the calendar year. Nagel, who is also a member of Palm's board of directors, has been an integral part of the Santa Clara, CA-based company's plans to create a new subsidiary out of the division that develops and licenses the Palm Operating System (OS). Nagel's appointment was announced in August 2001, just weeks after the resignation of former 3Com veteran Alan Kessler, who felt different leadership was needed to run the Palm OS unit as a separate business. 3Com had purchased Palm from modem-maker U.S. Robotics in 1997, and spun it off as a separate company in 2000. Palm remains top dog in an increasingly competitive market for handheld organizers, boasting revenues of $1.5 billion dollars in its fiscal year 2001. While the name Palm has become synonymous with handheld organizers, competitors such as Handspring, Sony, and Microsoft continue to chip away at its profits.

Before joining Palm, Nagel was president of AT&T Labs, and was chief technology officer for AT&T. Additionally, he served as chief technology officer for Concert, a global venture between AT&T and British Telecom. Before his stint at AT&T, Nagel was a senior vice president for Apple, in charge of its worldwide research and development group, responsible for the development of Macintosh OS software, Macintosh hardware, imaging, and other peripheral products. Nagel will continue to serve on the Palm board of directors after the new software subsidiary is formed.

In a Palm press release, Nagel spoke enthusiastically of his new appointment. "While it was very hard to leave AT&T, the opportunity to lead the handheld industry's leading software platform company is an excellent fit with my skills and interests," he said. "I am excited about the potential to extend the reach of Palm's platform as the mobile market expands into new areas, such as wireless communications and multimedia, and as handheld computers gain ground as productivity solutions in the enterprise."

Palm believes that by creating two separate independent companies, it can improve and build upon its position as a handheld computer and platform leader. The new subsidiary faces competition from formidable Microsoft, who has improved its PocketPC platform, which many believe now rivals Palm's OS; and PC makers such as Hewlett-Packard and Casio Computer sell PocketPC-based personal digital assistants (PDAs). By operating independently of its hardware company, Palm hopes that its OS division can successfully push the Palm platform to those companies who might choose to add Palm-powered devices to their handheld offerings. Ironically, the OS company's success might hurt Palm's hardware company, because each time the OS subsidiary signs a new licensee, it will cut into Palm sales. The Palm OS platform is the foundation for products created by licensees and strategic partners that include Franklin Covey, Handspring (which makes the Visor handheld), IBM, Kyocera, Sony, Symbol Technologies, and HandEra.