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Trouble ahead for Palm OS

Could affect product development

Palm's plans for future products could be affected by delays in development of the next version of the Palm OS software, the company warned in a regulatory filing.

The company has an agreement with its former subsidiary, PalmSource, to codevelop the operating system software for use in its PDAs (personal digital assistants) and smartphones. However, PalmSource, now owned by Access of Japan, did not meet some of the deadlines set out by the agreement, Palm said in a filing on Friday with the US Securities and Exchange Commission.

Palm must pay Access a minimum licence and royalty fee of $42.5m (about £22.8m) a year in 2006, but the minimum payment obligation in future years has been waived because Access missed the development milestones, it said. Palm said it owed Access royalties and licence fees totalling $35.4m (£19m) in its fiscal year to 31 May, and $32m (£17.2m) in the preceding fiscal year.

A spokeswoman for Access in Europe would not comment on the development delays, but said work on the software is continuing at sites in the US, Europe and China.

Access unveiled its plans for the next generation of the software, which it calls the Access on Linux Platform, at the 3GSM World Congress in February. The software, based on the open-source Linux operating system, will be able to run applications designed for Palm OS, it said then.

Palm is seeking more control over the development and distribution of the current version of the Palm OS software. It has licensed the software through 2 December 2009, and uses it in all its PDAs and most of its smartphones, it said. Some of its smartphones run Microsoft's Windows Mobile software.

If it is unable to negotiate this with PalmSource, then the development and distribution of products running future versions of the software may suffer, the company said. However, Palm will continue to release products running the current version of Palm OS, it said.

Delays in the development of Palm OS will not, in any case, affect the launch of Palm's next smartphone, due by the end of this year, because that model, being developed for UK mobile phone operator Vodafone, will run Windows Mobile, said a spokeswoman for Palm in the UK.


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