Handspring to return to the Palm fold

“Remember the PalmPilot, the fastest selling computer product in history? Well, that’s Handspring’s history in a nutshell. Jeff Hawkins invented it. Donna Dubinsky built the company that sold it. And Ed Colligan marketed it. Now they’re doing it all over again… even better… with Handspring.” (From Handspring’s Web site.)

Well, history is about to be rewritten. Palm last week announced its proposed acquisition of Handspring and therefore, the acquisition of the team that made the Palm a ubiquitous tool.

At the same time, the company plans to spin off its PalmSource operating system division into a start-up called PalmSource. The start-up will be responsible for the licensing and development of the Palm OS platform.

Meanwhile the combined Palm Solutions Group and Handspring (which will be renamed) will focus on designing, making and marketing handheld devices and smartphones.

It’s a great plan that Palm chairman and CEO Eric Benhamou, formerly of 3Com, is spearheading and one that could greatly benefit mobile commerce. On the one hand, he’ll have a group devoted to keeping devices on the cutting edge. And on the other, he’ll have a group devoted to creating killer applications. Both with fuel they need for each other without being beholden to one another.

It’s a gutsy move on Benhamou’s part. The acknowledgement that both divisions could succeed apart from one another is bold. And smart.

Benhamou is gaining in his portfolio the popular Treo device and its strong alliances with carriers. Handspring is being brought into the fold of a company that just released its Tungsten line and is making a serious play for the enterprise. Palm also still has a strong foothold in the consumer market. With this entire portfolio, Palm will be able to make significant waves in the next generation of handhelds and smartphones – perhaps rolling out e-commerce applications across both and boosting the multimedia capabilities available today.

What do you think? What should Palm do with its combined resources? What would you do if you were Eric Benhamou? E-mail me at sgittlen@nww.com with your thoughts.