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Palm has big plans for coming year as competition grows

Though still dominant in the handheld computing market it helped create, Palm faces major challenges this year.

The test comes at the end of a miserable year, filled with revenue shortfalls, product delays and the resignation of its chief executive, Carl Yankowski. Palm also lost the first round of a lawsuit brought by Xerox, which argued that Palm's handwriting-recognition software infringed a Xerox patent.

The new CEO, Eric Benhamou, has vowed to correct the missteps of last year. "We simply did not innovate enough," he said this month. "We have made it a priority to correct this trend."

While trying to match the innovative new features introduced by competitors like Sony and Handspring, Palm will push harder for growth in its platform division, which licenses the Palm operating system to some of those competing manufacturers. By attracting more licensees among rival hardware makers, Palm will profit from its competitors' success.

Palm intends to spin off the division by the end of this year, through sale to an outside investor or a public stock offering. Some analysts have said Palm may eventually abandon hardware sales to focus purely on software sales to become the Microsoft of hand-held computing. But to do so, it needs to compete with Microsoft itself, which makes its own operating system for corporate hand-held products.
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