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Handhelds Hardware

3Com Plans to Spin Off PalmPilot Division 67

Posted by CmdrTaco from the buy-assimilate-spin-off-repeat dept.
RoboChicken writes "3Com announced today that it plans to spin off the Palm computing division into a new, separate company. 3Com will deal with networking equipment, and the new company, "Palm Computing" (?) will be the PalmPilot company. "
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3Com Plans to Spin Off PalmPilot Division More

3Com Plans to Spin Off PalmPilot Division

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  • Apple did go a route like this. Then Steve Jobs came back and took the helm and, since the Newton was Scully's idea and Jobs hated Scully with a passion, Jobs pulled the newly spun-off Newton Inc back under Apple's control and killed it off with extreme prejudice.

    I don't think Apple's killing the Newton division had anything to do with managing their budget. After all, they had just spun off the Newton division as a seperate company that had no books/accounting in common with Apple any more! No, I think Jobs is merely a petty little child and killed the Newton because it was the one thing his successor/predecessor created that actually was new, innovative and mildly successful without Jobs having a finger in.

    -=-=-=-=-

  • If you had read the article they specifically state that there will be an IPO.

    3Com will make an initial public offering (IPO) for its Palm Computing subsidiary early next year, and intends to subsequently spin-off the balance of the shares of the new publicly traded company to 3Com shareholders.

    (sigh) And some moderator moderated you up.

  • I love when people have my sense of humor.
  • Licensing PalmOS, yes. They've already started this process with IBM, Qualcomm, Handspring, etc.

    Don't forget Apple, if the widespread "rumors" are true.
  • palm could also use a new ceo while its at it...palm has really given ms time to recover. for instance their feet-dragging in implementing WAP is ridiculous! They should have full support for web standards. teh only other option is that windows apis become standard "on the palm" (heh). no way theres' going to be some kind of lock-in for the palm api...
  • I use it. I was skeptical but no longer. Now I can find phone numbers, etc. and with the AvantGo application, I can take my Palm to the crapper and read news off Excite, Wired, NY Times, etc. whilst I take a dump.
  • For information on the Visor that many of the above posts have mentioned please read:

    http://www.zdnet.com/zdnn/stories/news/0,4586,23 30104,00.html?chkpt=hpqs014

    Expect the Handspring home page (www.handspring.com) to finally have pictures and real information when the Visor is formally released tomorrow.

    Also, perhaps a partial explanation for the split is that 3Com is backing a wireless project that seems to fly in the face of the existing PalmVII:

    http://www.msnbc.com/news/307945.asp

    Letting Palm Computing fend for itself would allow 3Com to focus on wireless networking for all PalmOS devices.


    - JoeShmoe

    -=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= -=-=-=-=-=-=-=-
  • Does that mean that the next pilot will be as cool as the device in Special F/X (the series)?
    I hope so... ;)
  • ... we can start expecting the Palm to pick up speed on new features, development of [better/more powerful] peripheral stuff, etc, etc?

    I'm thinking this is a good idea, because now we can see Palm taking their ideas and going with it more because, as the article said, they're an independently trading company (I think I remembered that right).

    Anyway, that's a good idea. I think more companies who are trying to do dual project efforts like 3Com's doing should check that out as an option. It's worked before, it should work again, no?
  • There are a bunch of enterprise uses already for the palmpilot. DB data entry is a big one, for instance. Enter stuff into the forms in the field, then sync it into the DB when you get home.
  • I was expecting this, but I'd thought it to come earlier. When 3com bought USR, they wanted the modem and ISDN technology, not the handheld, which doesn't fit in their product range at all. It made a bit of sense for USR (after all, that's a device possibly in need of a modem), but not for 3com.
    This should be a good move for everybody involved.
    Maybe even the Newton would still be alive if Apple went a route like this...
  • Handspring supposedly rolls out their first PalmOS-based devices tomorrow. Surely the timing is no accident.

    Until now 3Com/Palm had little real competition in the market, not even from WinCe devices. With the entry of the original developers of Palm into the market as licensee/competitiors, Palm now has to be a lot more nimble to keep selling their own devices. There's no way they could do that while being a division of a larger company, particular one with such a different focus.

    (In fact, that may be why Hawkins and Dubinsky left 3Com to form Handspring.)
  • Is that what you kids are calling it these days?

  • 3Com's probably come to their senses that Palm Computing needs to move faster, especially in the face of nimble folks like Handspring. This could be a Good Thing(tm) for all.

  • Will this end the rumors? (Score:3)

    by KevinRemhof ( 29738 ) on Sunday September 12, 1999 @11:17PM (#1686546)
    Lately, Palm has been subject to a lot of rumors. First, 3Com was going to sell the unit off. Next, Apple was going to guy it. Now, 3Com spins it off.

    This is a great move for 3Com and Palm. 3Com has no real interest in the handheld market. So, it is a win for them. Palm now has more freedom and marketability. They win too.

    I hope that this will end the rumors about the future of Palm. Many people have criticized 3Com for "holding them back". Jeff and Donna who started Palm have moved on to Handspring (which is debuting their new device tomorrow). Palm may now be able to keep good people. The corporate structure has been strange.

    So, let's see what happens with this. I know that it is a good move. I just hope that Palm can focus on developing new and innovative PDAs rather than just resting on its laurels.
  • "1) handheld operating system licensing."

    ... more likely they are looking at selling their own PalmOS to other manufacturers (taking on MS and WinCE?).

    Licensing PalmOS, yes. They've already started this process with IBM, Qualcomm, Handspring, etc.

    "2) enterprise computing solutions."

    On a plam top? Discuss.

    On a combination of palmtops and more centralized systems. Example: Salesdroid syncs his/her Palm with a networked PC database to load up the latest prices, etc. Goes off to customer site(s), makes sales, enters info into Palm, syncs again later to get the sales info into the system. And lots of variations on the theme.

    Bearpaw

  • Palm top computing and networking are fairly different animals so seperating them can't be a bad thing.

    Now for the emerging strategic market segments!

    "1) handheld operating system licensing."

    What exactly this means, I'm not sure... I'd like to think that they will be offering the Palm Pilot with a choice of OS(e.g. Linux, WinCE, Propriety), but more likely they are looking at selling their own PalmOS to other manufacturers (taking on MS and WinCE?).

    "2) enterprise computing solutions."

    On a plam top? Discuss.

    "3) wireline and wireless Internet services."

    Good!

    "4) portal sites."

    Everybody want some /. pie!

    "5) Palm-branded devices."

    Errr, is that other than palm top computers?
    --

    "I was either onto something, or on something!"

  • I wouldn't hold your breath: Handspring had a better chance to break into a 'fresh start', but didn't come out with anything revolutionary.
  • I completely laughed off any rumors of 3Com getting rid of the Palm line.

    This DOES make ythe most sence.. Let them work, but still have a leash. 3Com has better things to worry about, and the Palm line can take care of itself.. Now, if the Palm Vii Connected only came down to like 200$.. ;-P
  • Remember people.. it's no longer a palm pilot. It's a Palm[3-7]. There was a problem with that pen company, Pilot pens or what-have-you.
  • Where are you traveling, and what business do you work in? I use mine -all- the time, and whenever I go anywhere that IT or business people are, Palms are all around. Airports, conferences, etc.

    --
    Donald Roeber
  • This is indeed a Good Thing (tm) for the palm pilot, I had thought that 3com would eventually (in the end) go belly up due to "innovations" in the handheld market, I use that term losely because most competitors have used Win CE (just what I need no keep board no mouse and a damn pen to do everything...) but I digress.

    So 3Com spins off a new company X, company X goes IP0 and now has lots of dough. And maybe, just maybe with enough dough they'll put out a reasonably priced unit with more than 2mb of ram, but then I could be just dreaming...

    Later Kids...
  • Handspring supposedly rolls out their first PalmOS-based devices tomorrow. Surely the timing is no accident.

    Indications are that Handspring and Palm will split the market... Handspring will make "consumer" and Palm will make "Professional" models.

    Of course, 3Com has never been too confortable with Palm (and indeed, everything that came with their purchase of US Robotics) - in spite of the success of Palm's products, it simply doesn't fit with 3Com's line. The recent billion-dollar agreement with IBM shows that 3Com will be better off in its traditional networking and enterprise markets.

  • In answer to several above posts, Handspring is not going to be a "me too" of the existing Palm models. They are specifically targetting students (college and high school) and general consumers who may have been afraid of previous electonic organizers (like Sharp Wizard, etc.)

    No self-respecting business person will probably carry around a Visor at work. I haven't seen pictures yet, but I'd be willing to bet that the Visor models will have a decidedly non-business look to them (although hopefully not as bad as what Apple would come up with).

    Palm models have been in such high demand that they have been able to sell 4 million+ units even at $250-$400 prices. This can't continue so companies like Handspring are going to have to create a more accessable version...Visors are going to be the "Mercedes C Class" of the PalmOS world while the Palm V will continue to be the "big Mercedes".

    Visor's most interesting feature, IMHO, is the idea for hot-swappable modules called Springboards. The idea here is that the PalmOS does not have the memory/batteries to perform certain functions as well as standalone devices (MP3 playback is not possible on a Palm and not really practical on a WinCE). But, by using a serial connection, a Palm is more than qualified to be the interface to control a separate device.

    Imagine if you could take the screen/controls off off a Rio and then plug it into the back of your Palm. The PalmOS provides the interface to pick songs, pause, adjust EQ, etc. while the Springboard provides the 32MB memory and extra batteries to provide acceptable sound levels (sort of like the Boostaroo product that amplifies MP3 playback on too-quiet WinCE headphone jacks).

    I can think of several different devices that could benefit from a much larger screen, ability to keep history lists, exchange data with PC, and so forth. Pagers are an excellent candidate for Springboard modules. I'm really quite excited; I only hope someone comes up with a Springboard socket adapter for my Palm V.

    I fully expect Visor to be the final nail in WindowCE's coffin. I know many people who see Palms that cost $250-$400 retail next to WinCE devices that are $350-$500 dollars. I'm sad to say that many of them instantly buy the WinCE devices because they feel they are getting so much more (color, sound, etc.) for their money.

    What the general public has failed to realize thus far is that PalmOS is a tool, and as such does not NEED color or sound to provide information. Now thanks to Visor, the ante into the handheld game is only $150...people might finally understand how all the color and sound in the world doesn't make your address book any more functional.

    My $0.02, not necessarily yours...

    - JoeShmoe

    -=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= -=-=-=-=-=-=-=-

  • Newton went the wrong way (Score:2)

    by Anonymous Coward
    My senior year in college (1997) I took a course called Moble Computing. Primary focus was on programming the Newton Message Pad 1000. Let me tell you a few things about what Apple did wrong from a 1st hand development experience and how Palm Computing did it better:

    1.) NewtonScript - it's like Pascal on crack. A specialized lang that is rather annoying to work in. Palm by contrast uses good old C and Motorola 68K assem (if you so wish). Short of some restrictions on string manipulation that you have to get used to, writing stuff for the Pilot compared to NewtonScript is a dream.

    2.) Dev kit licences - in typical Apple fashion, they wouldn't let any 3rd parties come in and produce dev tools. Palm/3COM said, "Codewarrior is oursourced dev kit, but here's the include files, general dev info, .PRC format, etc. Generate Moto 68K code with em. We can't quite *OFFICIALLY* support independant stuff (*wink* *wink* - *nudge* *nudge*), but we'll help you if we can. Write Apps for our platform!"

    3.) Form factor - I loved the Newton when I had it , but I always hated how bulky it was. I hardly think about packing my Pilot around.

    4.) Handwriting recognition - Just watch some old Simpson's episodes or leaf some old Dilberts. The handwriting recognition NEVER matured in Newton's lifetime. After 5 months with the Newton, I still couldn't get as fast or accurate as I wanted to be witht it. I was ripping on Graffiti by the third day I had my Pilot and many Pilot owners will point out that 3 days to learn Graffiti is considered SLOW.

    5.) Price - Apple has never been smart here. Even up to the death of the Newton, they were more expensive than the Pilot. Bottom line, anyone who got to spend some time using both would have picked the Pilot.

    Lucky for all us Pilot fans, M$ never got it with WinCE (pronounced "wince", as in what a user does when interacting with the device). It's slow, bloated, and even with the most recent rework isn't worth spending a nickel on. I hope the morons at M$ keep beating the dead horse that is the WinCE device concept. As long as they're focused on that, they'll neve get close to PalmOS.

  • The other day a co-worker, a developer with a Palm III, said to me, "Hey, Bill! Wanna see what I'me doing with my Palm lately?" I took a pass on that one.

  • I had a Newton. Now I have a Palm Pilot. No comparison. The Newton sucked.

    With my Pilot, I don't have to:

    • Change batteries WEEKLY

    • Wait for it to sort the address book EVERY TIME I need a number

      Carry around a 5 pound 'lead weight'

      Wait for it to boot, if I've been trying to save batteries

    I'm sure there was more I've forgotten now.

    I believe Apple was smart to get out of the Newton business when they did, with something like the Pilot on the market. Only thing they did wrong was wait so long to get out.
    --

  • ... No self-respecting business person will probably carry around a Visor at work. I haven't seen pictures yet, but I'd be willing to bet that the Visor models will have a decidedly non-business look to them (although hopefully not as bad as what Apple would come up with).

    Handspring has said that they'll be more heavily targetting the consumer market, while Palm has made noises about concentrating on the business market. So I think you're right, for the most part.

    But ... Palm seems to have made at least some effort to get students with the IIIe, and while Handspring's design may be too flashy for most corporate droids, I bet there will be bleed-over in that direction, too. (Especially if a company/employee wants to cultivate an non-pinstripe image.)

    It'll be interesting to see how it all shakes down.

  • True, the IIIe was an attempt, but in my opinion a very bad one.

    First of all...it isn't really any cheaper. List price for the IIIe is something like $220 and you can find the IIIx listing for $270. For $50 you get an extra 2MB of ram plus the option for cool expansion cards (including an 8MB option). Even just 2MB RAM gives you double the Palm for less than one=quarter of the money.

    The Palm IIIe must be for the penny-pinchers that really don't think they'll ever need more than 2MB of RAM and would rather keep the $50. But to those penny-pinchers I say find some of the good close-out bargains on the Palm III. I've seen www.pricewatch.com list them occasionally for less than the $150 you would pay for a Visor.

    True, you don't get the newer screen or processor but considering you can find a beta copy of OS 3.3 that works for Palm III (not just IIIe, IIIx and V) it doesn't look like Palm III will really be "obsolete" for at least a couple more years.

    Of course, 3Com might hack the ROM to only work on the DragonBall processor and thus put Palm III out to pasture, so if the 2000+ applications availble for OS 3.0 aren't enough for you, you should probably choose Visor over Palm III.

    Anyway...I agree...it will be interesting to see how this all ends up but IM-Biased-O anything that says "cheaper" and "more features" is a good idea to me...

    - JoeShmoe

    -=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= -=-=-=-=-=-=-=-
  • Point is that it's some sort of confusion on the trademark or whatever it may be. When people think pilot, they think the PDA and not the pen anymore.

    And you mind going by the name steve, but what if you hated it? By the same parallel, how would you like it if someone copied your identity? Point is, it causes confusion and legally, Pilot (the pen company) has rights.

  • Newton did do this, a full spin off from Apple, a few months later, Apple backed out and reabsorbed, then killed the newton. It was a bloody time. This is the reason I will never buy another apple product. http://www.wetworx.com/

  • Funny (Score:1)

    by Lamont ( 3347 )
    Thanks for that. It's always nice to get a good laugh early on a Monday morning!

  • How ironic. (Score:4)

    by generic-man ( 33649 ) on Monday September 13, 1999 @12:09AM (#1686568) Homepage Journal
    For those that remember the Palm saga, it goes a bit like this:

    A tiny start-up named Palm Computing demonstrates a prototype of the Pilot organizer.

    US Robotics buys Palm Computing.

    3Com buys US Robotics.

    And now 3Com wants to spin off Palm Computing so that it's an independent company.

    It's the circle of life...
  • Apple *almost* did this with the Newton, but it wasn't a full spin off from Apple and a few months later Jobs came in and screwed everything up reabsorbing the Newton division. Of course he then killed it because it wasn't his idea (over simplification)! I will never buy another Apple product as long as Steve Jobs is in charge. I hope he is kicking himself for not spinning off Newton and doing the whole IPO thing. The Newton is still a better PDA than any of the WinCE boxes I've seen, but the Pilot is a completely different philosophy.
  • I think everyone here agrees this is great news for Palm Computing. It should hopefully free them up to be a little more innovative, a little more "quick on their feet."

    Handspring is going to be the first real competition for Palm branded devices. The IBM Workpad, the Symbol device...they are basically just OEM'd 3Com units. Visor, while still using some 3com OEM parts, will bring some diversity and choice to the platform, which can only be good. As long as the PalmOS platform continues to flourish and draw more hardware vendors and developers into the fold, the less likely WinCE is to succeed. And that's a Good Thing.

    I wonder though whether this is good for 3Com? Seems like the Palm division was one of the few, if not the only, sucessful ones. I thought I read a statistic that indicated they contributed to 10% of 3Com's revenue?
  • It will always be a Pilot to me. I started out with a Pilot 1000, and I still refer to my Palm V as "my Pilot".

    Sounds a hell of a lot better than referring to it as "my Palm".
  • It will always be a Pilot to me. I started out with a Pilot 1000, and I still refer to my Palm V as "my Pilot".

    Sounds a hell of a lot better than referring to it as "my Palm".
  • Click here [dhs.org] for a scanned photo of the upcoming Visor that was published by Tap Magazine [tapmagazine.com]. I happened upon a link from a Palm newsgroup. Looks remarkably similar to a Palm Pro/III and surely wouldn't embarrass any "self-respecting business person."

  • Re:Waiting for a Palm IPO? (Score:1)

    by Anonymous Coward
    Palm will probably not be an IPO, it will probably be spun off, where 3Com shareholders will get shares in the new company based on their 3Com shares. That is how I read taking the company public - if 3Com was selling off Palm division, they would use words like "divesting ourselves," "selling off," or similar.

    I am not a finance specialist, but the problems at Palm are management style, not lack of resources. Companies go public to raise capital, they get spun off to avoid layers of management.

    Just my thoughts...

  • I sincerely apologize for offering an opinion counter to the majority of posters.

    I guess I shouldn't bother joining discussions, regardless of my experience with the subject.


    --

  • God bless anonymous posting!

    "The number of suckers born each minute doubles every 18 months."
  • I would LOVE to have a palm OS device with a Palm V form-factor, and an Apple-Macintosh G4 case color scheme. That would be the cat's pajamas.

    "The number of suckers born each minute doubles every 18 months."
  • What donkey called these eminently sensible comments flamebait? Surely a love of energy efficiency and a lack of love for weight training doesn't make this guy a troll?


  • How the H_ll did this go from a Score:2 Interesting to a Score:1 Redundant?
  • Isn't it obvious what it was that you did? You dissed Apple, and that is a cardinal sin amongst Mac lusers. (this is flamebait)

    I agree with you fully Mononoke, for I too own a MessagePad. The Newton was a great device to program, but it had one fatal flaw: It wasn't one of Steve Jobs babies (errm... I mean projects, because we all know that he does abandon his babies). They let it go to sink or swim, then Jobs reeled it in because he couldn't stand to have a product line succeed that he didn't "create".
  • You realize that if we continue to use Pilot in reference to the PalmPilot, that Pilot pens will lose their trademark. They have to aggressively defend their trademark, if it becomes part of the popular vernacular, they lose it. So call your pilot a pilot wespecially when there's a shot of you being quoted on TV...
  • Leaving the county doesn't really qualify you as having "travelled extensively". If you went to the big city, you'll see lots of people with a Palmpilot. :)

    When I carried a Newton around, anyone who owned one who saw me unpack it would run up and swap notes (and business cards) with me. Now, there are so many people with Palms, hardly anybody notices it, and everyone knbows at least one person who has one.

    Maybe its a West Coast thing...

  • "5) Palm-branded devices." (Score:1)

    by Anonymous Coward
    Hmmm,

    Could we be seeing the advent of the PalmPhone, PalmFAX, a clip-on PalmBeeper? Palm printers that attach to the PDA, or to other PDAs?

    As for: "2) enterprise computing solutions."
    One thing I can see is a PDS assistant for travelling techs - something with specs, manuals, yadda-yadda... Stuff we already do with them, but company sanctioned. Perhaps a wireless network while on premises, with communication facilities and such? Forget your phone and office, just take the PDA and any available workstation - that's your office today.
  • What industry do you work in? I'm in computer consulting so that may explain part of it, but I don't think I know anybody who does NOT have a Palm Pilot. They're ubiquitous.
  • You could just buy 3Com now.
    When the spin off occurs, you will get a certain amount of shares of the new company, in addition to retaining a large portion of your share in 3com.
  • I'm quite sure for people everywhere, its a more comfortable thing to say. The name simply sounds better and I'm quite sure the marketers who originally named it that discovered that through some sort of analysis.

    But if you changed your name to say, steve, should you stil be called by your old name? Maybe, but this (palm) is of legal issue and cannot be worked around, legally. So if you go into a store and asked for a palmpilot, don't be surprised if the representative that's never heard of a palmpilot as such, be confused.

    Cheers!
    SpOrTy!

  • Q & A (Score:1)

    by Anonymous Coward
    Why is the timing right for this?

    Under 3Com management, Palm's business experienced rapid growth and
    prosperity. Revenues more than doubled annually, the business became
    profitable, Palm further increased its no. 1 market share position
    worldwide, and its business expanded to include licensing and services.
    There are three key reasons why it is the right action to form an
    independent, publicly - traded Palm company now: critical mass, market
    potential to move its successful platform beyond Palm-branded devices,
    and the opportunity to maximize shareholder value for 3Com and future
    Palm shareholders.

    There are significant new strategic opportunities for growth that are
    emerging in the handheld computing arena. Palm is uniquely positioned to
    capitalize on a number of these emerging segments including: 1) handheld
    operating system licensing, 2) enterprise computing solutions, 3)
    wireline and wireless Internet services, 4) portal sites and 5)
    Palm-branded devices.

    Why couldn't we have successfully leveraged Palm as a subsidiary?

    We have successfully leveraged Palm as a subsidiary and as the
    opportunities for growth have expanded dramatically, now it's time to
    ensure that it flourishes and is fully valued in the market for its
    business strategy and prospects. This can best be accomplished with an
    independent board of directors and an independent senior management team
    that is focused on maximizing the financial and business models of Palm
    for its customers and shareholders.

    Why does 3Com need to do a subsidiary IPO and then a spin-off? Why
    couldn't it all happen at once?

    This two-stage process is very common in transactions of this kind for a
    variety of tax and accounting reasons. Palm actually becomes an
    independent company at the time of the IPO. At that time, 3Com intends
    to be its largest shareholder with more than 80 percent of Palm's stock.
    Additionally, Palm will have a separate and distinct board of directors
    and management team.

    What changes does this imply for each business unit?

    The intent to separate Palm from 3Com in itself does not require any
    changes in the plans of either PCBU or NSBU. Having said that, however,
    we will continue to focus our efforts on those product and technology
    areas that promise the highest growth and return on investment from the
    3Com networking businesses. And, as we have said before, this focused
    strategy could require some investment, acquisition and/or divestiture.

    We recently restructured PCBU and NSBU. Does today's announcement impact
    the organization of these business units?

    It does not impact the organization of PCBU and NSBU.

    How does this move complement NextWorking?

    Our NextWorking plan is designed to transform the growth profile of the
    company and increase the value of 3Com in the market place. Both the
    strategic and operational plans described by NextWorking are consistent
    with both this action, and our intent to focus on winning in the market.

    Palm, mobile handheld devices and the Palm Economy are still key
    elements of 3Com's user-centric strategy. User-centric networking is
    about creating connectivity for people regardless of where they are or
    the type of connection they are using. A thriving Palm Economy is very
    important to 3Com because the Palm Economy is creating new types of
    users of and uses for networking. 3Com expects to be a licensee of Palm
    technology and a contributor to the growing Palm Economy.

    What happens to the LAN telephony products under development that
    include Palm Computing® technology? Will 3Com still have access to Palm
    Computing technology and patents?

    3Com and Palm will continue to collaborate on several breakthrough
    initiatives, including LAN telephony. Additionally, 3Com will be a
    licensee of Palm.

    Why is this particularly exciting for employees?

    We are making the decisions -- and the investments -- that over time are
    changing our growth profile. Over the next several quarters, we are
    making the transition from slower growth, mature products to higher
    growth products, including wireless, and voice, to name a few. 3Com is
    moving toward greater shareholder value, and this bold move is one
    significant proof point of that.

    Will there be any reductions in force as a result of this action?

    It is not anticipated that there will be reductions in force. In fact,
    there are significant opportunities in both businesses and Palm and 3Com
    are recruiting aggressively to fill open positions.

    It has previously been stated that 3Com's strategy was to decrease its
    dependence on mature or no-growth businesses while increasing the
    percentage of sales from high growth businesses such as Palm Computing.
    If Palm Computing becomes a separate company, what will 3Com do to
    improve its growth profile?

    Our objective to transform the growth profile of 3Com has not changed.
    By creating two focused leadership companies for networking and handheld
    computing, we can help ensure we win in these two distinct markets. It
    is also important to recognize that although Palm Computing has been one
    of the fastest growing businesses in 3Com, there are also high growth
    segments within both Network Systems and Personal Connectivity. More
    management bandwidth with a clear, unambiguous charter will allow us to
    focus and accelerate the development of these high-growth segments to
    increase the value of these businesses for our customers, shareholders
    and employees.

    What happens to the corporate functions that support Palm?

    During the transition period prior to a spin-off, Palm will continue to
    rely on 3Com corporate resources. Individuals in these roles will be
    asked to help assist Palm develop independent infrastructures. At the
    same time, the growth of 3Com's core networking structure will require
    most, if not all, of those resources going forward.

    Palm has helped to create substantial name recognition for 3Com. When
    both companies are separate entities, what will we do to ensure that we
    achieve the brand and name recognition we need?

    3Com has achieved name, but not brand, recognition as a result of Palm's
    enormous popularity. 3Com has plans to continue to strengthen our brand
    recognition in the networking space, and this will be accomplished
    through a variety of programs, including a significant investment in TV
    and print advertising. It is also important to note that identity with
    Palm did create some confusion about 3Com's commitment to the core
    networking business. Today we are making it clear that 3Com is building
    two distinct companies in two distinct markets -- handheld devices, and
    networking.

    Does the Palm announcement mean Palm will be moving manufacturing
    capacity out of Salt Lake City?

    Palm has always had a multi-vendor manufacturing strategy because the
    basic philosophy is that it yields the best solution for the business.
    The respective vendors are always competing for ways to improve our
    cost, flexibility and quality of the service they provide to Palm
    Computing. Palm's business decisions regarding manufacturing partners
    will continue to be driven by cost, quality, relationship and
    flexibility. The Palm decision announced today does not change our
    approach. Palm has been fully engaged with the Supply Chain Management
    teams and are actively partnering with them to ensure we make the best
    possible decisions in support of our employees and shareholders.

    Who are the members of Palm Computing's management team and board of
    directors?

    3Com directors, James L. Barksdale, managing partner of the Barksdale
    Group and former CEO of Netscape, and Gordon A. Campbell, president and
    chairman of Techfarm, Inc. will move to the Palm Computing Board of
    Directors. Judy Bruner, 3Com vice president and Corporate Controller
    will become Chief Financial Officer. Other board and executive
    management decisions are expected to be announced prior to the filing of
    the appropriate registration statements with the Securities and Exchange
    Commission.

    Will Barksdale and Campbell remain on 3Com's board as well?

    No, after the IPO, they will focus on further expanding Palm's business.

    Will there be other 3Com Board or management moving to Palm's board?

    You can expect that 3Com will also be represented on Palm's board as
    long as 3Com is majority shareholder of the company.

    When do you expect to announce the CEO for Palm?

    Significant efforts are underway and we expect to announce prior to
    filing for the IPO.

    Why are you searching for a new CEO? Didn't you just appoint Alan
    Kessler as president of Palm Computing?

    Yes, Alan Kessler is currently president of Palm Computing. Consistent
    with the formation of a separate Palm company, we will be creating two
    new executive positions -- CEO and CFO. Judy Bruner, 3Com vice president
    and Corporate Controller, has been confirmed as CFO. However, we are not
    prepared to announce a CEO at this time.

    Will 3Com executives transfer to Palm?

    Until Palm is a separate company, 3Com will continue to consider both
    internal and external candidates for all open senior management
    positions.

    Does this mean that rumors about Lucent or another large telecom company
    acquiring 3Com are true?

    As a matter of policy the company does not comment on rumors and / or
    speculation.

    When does Palm actually become an independent company?

    At the time of the IPO.

    How will my employee compensation and benefits be impacted as a result
    of the spin-off of Palm Computing?

    3Com/Palm compensation and benefits plans are considered competitive.
    Until the spin-off, 3Com will own more than 80 percent of Palm Computing
    and as such the current compensation and benefit philosophy and plans
    will generally not change. However, after the IPO, both companies will
    ensure that their compensation and benefit plans reflect their
    respective business goals.

    Will 3Com employees have equity in Palm?

    Employees who are 3Com shareholders, like all other 3Com shareholders,
    will receive shares of both companies when Palm is spun off (NOTE: THIS
    REFERS TO SHARES, NOT OPTIONS).

    What happens to my 3Com options?

    There are no changes to your 3Com options at the time of the IPO. When
    Palm is spun off, 3Com options will be adjusted to reflect the economic
    values of the companies post-spin:

    Employees who are part of the Palm Computing spin-off will have their
    3Com options (both vested and unvested) adjusted into Palm options. The
    number and exercise price of such Palm options will be based on the
    economic value of their pre-spin 3Com options (both vested and unvested)
    calculated at the time of the spin-off. The vesting period of such Palm
    options will remain the same as the vesting of the pre-spin 3Com
    options.

    Employees who continue with 3Com after the Palm Computing spin-off will
    have their 3Com options (both vested and unvested) adjusted into new
    3Com options. The number and exercise price of such new 3Com options
    will be based on the economic value of their 3Com options (both vested
    and unvested) calculated at the time of the spin-off. The vesting period
    of such new 3Com options will remain the same as the vesting of the
    pre-spin 3Com options.

    How will this decision affect 3Bonus targets and payouts?

    As stated above, in general, 3Com/Palm compensation and benefits will
    remain unchanged until the spin-off. Specific changes may be implemented
    post-IPO if deemed appropriate by 3Com and Palm.

    How will this affect Employee Stock Purchase Plan (ESPP) purchases?

    At this time, there are no changes to ESPP.

    How many shares will be issued for Palm Computing at IPO? What percent
    of Palm Computing will 3Com own?

    The number of shares and valuation is still to be determined. However at
    IPO, 3Com will be the majority shareholder, owning more than 80% of Palm
    Computing.

    What is the timeline for the IPO filing?

    Filing of the appropriate registration statements with the Securities
    and Exchange Commission is expected to occur within the next 90 days.

    Will Palm remain on the campus, or move to another location?

    At this point, Palm will remain on the 3Com campus. Until Palm is spun
    off, the management of Palm and 3Com will need to work together to
    decide the right course of action for both companies.

    What makes you think Palm will be successful as an independent public
    company?

    Palm has the leading market share with huge market opportunities
    including these emerging market segments: 1) handheld operating system
    licensing 2) enterprise computing solutions, 3) wireline and wireless
    Internet services, 4) portal sites and 5) Palm-branded devices. Great
    technology Palm revenues have more than doubled annually Palm is
    profitable and in fact has improved its profitability dramatically Palm
    has the largest developer community (20K plus) Palm strategic partners
    and licensees Great people/management Experience (we built the first
    successful handheld business)

    What does this mean to my customers?

    This is extremely positive news for both 3Com and Palm customers
    respectively. We believe that the focus and clarity that this change
    will bring to both the networking and the handheld computing markets
    will lead to greater customer satisfaction, improved collaboration and
    partnership, and stronger market positions for both companies.

    Do I need to change the way I do business with 3Com and Palm?

    The sales operations of both companies are largely separate today so
    there will be no immediate change. When Palm becomes a separate company
    it may adjust its business practices to meet the needs of its distinct
    customer base. In the markets where 3Com has primary responsibility for
    selling Palm solutions this will continue. As Palm becomes an
    independent company, these selling activities will be managed on a
    contractual basis, as makes sense for each business. For the time being
    sales operations, supply chain processes and contractual terms will
    remain the same. All of our customers (3Com and Palm) would be given
    adequate notification of any changes to business terms.

    Will Palm change its distribution practices?

    There are no plans for either Palm or 3Com to change their distribution
    practices.

    Are there any changes to our existing sales plans/targets?

    No

    Will Palm employees go to next year's Chairmans Club?

    It is expected that Palm employees will go to their own recognition
    event since it most likely will be held after the spin is concluded.
    Rules for attending the Palm event will remain as they are today for
    Palm employees. Details will be communicated by the Palm executive team

    We have announced a 3Com strategy, architecture and networking products
    that leverage Palm - for example Transcend® network management. Will
    these plans continue?

    Yes. 3Com will continue to deliver on its user-centric strategy. As a
    licensee of Palm 3Com will continue to collaborate on all existing, and
    several new, promising areas such as LAN Telephony, wireless solutions
    etc.

    Will 3Com and Palm continue to collaborate with partners - such as AOL?

    Where it makes sense to offer a complete "user-centric" solution
    offering 3Com and Palm products we will collaborate. However, one of the
    reasons for the structural change and business separation is to allow
    both businesses to fully engage with those partners appropriate to their
    business needs and objectives. For example this change will allow 3Com
    to achieve closer collaboration and clarity with respect to its
    relationship with Microsoft (obviously a current competitor of Palm!)
  • What I find ironic is that one of the probable motivations for 3Com spinning off Palm Computing is Handspring -- which was founded by the original founders of Palm Computing. What's even more ironic is that -- according to some sources -- Handspring was formed because 3Com refused to spin off Palm a year ago.

    Go figure.

  • I hope he's kicking himself too! :) The Newton had great potential. WinCE tries to be both what the Newton was and what the Palm is. If Newton had continued to be developed we would probably be seeing pretty cool version by now. (Thinner and with working handwriting?) As long as SJ is in charge, I'll not even buy a screw from them! :/

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