Will Palm Spin Off OS Operation?Will Palm Spin Off OS Operation?

Palm Inc. plans to form a wholly owned subsidiary out of its platform-solutions group, which is responsible for developing and licensing the Palm OS.

The move could be the first step toward spinning off the operating-system unit as a company, something predicted by some industry analysts for some time. Industry observers have said that a spin-off would strengthen the struggling Palm, particularly now as it feels new heat from Microsoft and its Pocket PC platform.

"Any company's mission is to optimize the value for its shareholders, and splitting in two could do that. 3Com did it, and it created Palm," says Craig Mathias, principal of Farpoint Group.

Some Palm users are applauding the creation of the subsidiary as the company's best way to win customers of large businesses.

"Up until now, the Palm has been good for enhanced personal and basic business uses," says Michael Steinberg, president of the New England Palm users group, in Boston. "But the feedback I've been getting from people is it's gotten to the point where we want to use it for more specific enterprise apps and it needs more horsepower to be able to do that."