Taiwanese PC and electronics device maker Acer Inc. will announce Friday that it will license Palm Inc.'s Palm OS operating system for use in a PDA (personal digital assistant), Acer spokeswoman Erica Hao said on Monday.
The company had been reported close to a deal with Palm for licensing of the operating system for a PDA now in development. The company demonstrated at last year's Comdex trade show in Las Vegas a PDA that was based on the Linux operating system. The deal will make Acer the first Taiwanese company to license the Palm OS, which runs the popular Palm brand, Handspring Inc. Visor and Sony Corp. Clie PDAs. In addition to Sony, Japan's Kyocera Corp. and South Korean Samsung Electronics Co. Ltd. are the only other Asian companies that have licensed the Palm OS.
At Comdex last year, Palm was conspicuously absent from PDA demonstrations by Acer and several other Asian vendors, including Taiwan's Mitac International Corp., TCL Holdings Co. Ltd., Micro-Star International Co. Ltd. and CMC Magnetics Corp., and South Korea's Gmate Co. Ltd. and Cyberbank Corp. Acer and Mitac officials said then that Palm had turned down their licensing applications because of concerns about razor-thin margins in the OEM (original equipment manufacturer) business.
Palm's share of the market for PDA operating systems lags in the Asia-Pacific region (excluding Japan), at 25.5 percent in 2000 versus a worldwide share of 75.9 percent, according to Manny Lopez, personal systems analyst at International Data Corp. (IDC) in Hong Kong. One reason for that discrepancy is mainland China: Excluding China and Japan, Palm's share in Asia-Pacific is 62.5 percent. The company does not yet offer a Chinese-language Palm OS. Most of the popular PDAs in China now use proprietary Chinese-language operating systems.
The PDA market in Asia is already large and is expected to grow rapidly. More than 1.4 million PDAs will be sold in 2001 in Asia-Pacific (excluding Japan), according to Dataquest Inc., a wholly-owned company of Gartner Group Inc. Dataquest expects that figure to grow to surpass 3.9 million per year by 2004.
Acer might find a ripe opportunity in China, where the company already has made large investments to develop the market, said Amy Teng, a Taipei-based Dataquest analyst.
"What they should be concerned with is the China market, because they have great potential," Teng said.
IDC's Lopez believes the Palm OS could meet Chinese demands better than Microsoft Corp.'s Pocket PC platform.
"In the China market, the Palm OS would be more ideal, because it's a cheaper OS and the hardware probably is going to be cheaper," Lopez said. Most of the popular PDAs in China today are more like traditional Palm personal organizers than the larger, multimedia-capable Pocket PCs.