PDA maker Palm pledged Tuesday to invest in a new publishing company whose aim is to provide media from Secure Digital (SD) and MultiMediaCard (MMC) formats.
Palm and an undisclosed roster of private investors took a minority interest
in the new company, Mobile Digital Media, to develop and distribute software
through SD cards and MMC. Palm’s former COO Barry Cottle will serve as CEO,
while Palm’s former chief marketing officer, Satjiv Chahil, will be chairman
of the board. The deal calls for Mobile Digital Media to received access to
Palm’s distribution pipe, in addition to preferred treatment for its
products.
“Mobile Digital Media will dramatically increase the content available on SD
and MultiMediaCard media,” Cottle said in a statement. “Our focus will be on
leveraging our advantage as a leading publisher on expansion media to
attract high-quality content and grow the market.”
Last week, Palm announced Sony
had invested $20 million in PalmSource, Palm’s unit for licensing its
dominant operating system for handhelds. Palm would like to separate the
two companies by the end of the year.
MMC and SD are minute flash-memory cards the size of a postage-stamp size
memory card and weighing about two grams. SD and MMC act much like a
souped-up and miniaturized CD-ROM, storing applications, text, images, and
video and audio files for digital cameras, PDAs, and other mobi2le devices.
Blank SD cards have input-output capabilities for storing up to 128MB of
information.
According to research done by Creative Strategies, a Silicon Valley
technology consultancy, there were 2.1 million handhelds with SD and MMC
capabilities as of February. The company predicts that number will grow to
350 million appliances by 2006.
“The SD slot is well on the way to becoming universally accepted in handheld
devices,” said Gartner Group analyst Todd Kort, “so [Mobile Digital Media’s]
efforts will benefit the entire PDA industry, not just Palm.”
SD and MMC media have gained wide acceptance. The SD Card Association, for
instance, boasts 500 participating companies, including Toshiba and SanDisk,
which helped develop the standard.
Mobile Digital Media will continue to make the utility cards that Palm had
made. The new company said it would unveil new cards by Christmas, including
a Rayman game and a Lonely Planet worldwide travel guide card.
Palm, which has dominated the handheld market until recent wobbles, gave the
formats a big push in March 2001, when it rolled out
its Palm m500 family of handhelds using the standards. The company has
continued to support the media, through its solutions unit, now boasting a
suite of PalmPak cards focused on travel and games, in addition to SD-format
backup cards.
After defining the market with its PalmPilot line, Palm saw its stock price
dwindle to below $1, before executing a 1-for-20 reverse stock split last
week, as it lost market share to Microsoft’s PocketPC and its various
Windows CE licensees.
Palm saw its PDA market share slip in the second quarter, as customers
awaited the release of its latest devices powered by Palm OS 5, which is due
for release on devices later this month. According to Gartner Dataquest, the
Palm OS captured 50 percent of the worldwide PDA market, while Microsoft
Windows CE PDAs had 28 percent.
In a big push to recapture its flagging product development, Palm has rolled
out a new entry-level PDA, the $99
Zire.
Kort pointed out that, ironically, the Zire does not have SD or MMC capabilities.
“Because the Zire is a rare PDA that does not include a SD slot
and by not including one they are in effect saying SD is not important,” he said. “As
such, Palm is talking out of both sides of their mouth about the importance
of SD and SD media.”
