3Com splits off Palm: Company hopes for bolstered networking company

After refusing to do so for years, 3Com decided last week to spin off its Palm Computing subsidiary into a separate, public company. Although most agree that the move will allow Palm to be more aggressive, some were left wondering about the fate of 3Com, which has lost market share to Cisco Systems and other networking leaders.

"3Com will have a renewed commitment to its networking business. Some have feared we've been distracted by the hand-held business," said Eric Benhamou, chairman and CEO of 3Com.

3Com's ability to go it alone may be a moot point. Since word of the split, rumors have abounded regarding possible suitors for both halves. Lucent Technologies, Ericsson and Nokia may court 3Com, while Nokia may look to acquire Palm.

One of the strongest innovations the new Palm will support is wireless connectivity. "We're focusing on leading the way in wireless data access, which is really nascent," said Janice Roberts, senior vice president for business development for 3Com. The Palm VII device currently includes a wireless modem that operates on the BellSouth wireless data network.

"You'll also see us enabling wireless access over other networks," she said. The independent Palm also aims to focus more on licensing its operating system (OS) to encourage a proliferation of hand-held devices.

Perhaps not coincidentally, last week Handspring, a company started by the inventors of the original PalmPilot, introduced its first hand-held computer. Running on the Palm OS, soon the device is expected to soon accept adapters that will enable wireless transmission.

Those same Palm inventors had urged the Palm spinoff when they still were with the company. "They wanted it to be spun out for more individuality and indepen dence," said Becky Diercks, senior director of telecom and wireless research at Cahners In-Stat Group. 3Com argued that the Palm division needed to reach a critical mass before it could stand on its own.