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David Nagel, president, CEO and director of mobile operating system developer PalmSource, is vacating his role at the company—on the eve of the company's annual developer conference—officials said Monday. Nagel's (see image) departure marks the second shift in personnel at the upper ranks of major handheld companies in less than a week, and third since February.

The board of directors at number one PalmSource licensee palmOne made Ed Colligan's tenure as CEO permanent a week ago—previous chief executive Todd Bradley quit in February—while Hewlett-Packard replaced Chairman and CEO Carly Fiorina with Mark Hurd after the former stepped down following disagreements with the computer and printer giant's board on how to govern the company, among other factors: HP surprised Wall Street in Hurd's first quarter as CEO with better than expected financial results.

Taking Nagel's place is the Sunnyvale, Calif., company's top salesman, Patrick McVeigh, senior vice president of worldwide licensing, who the board of directors nominated as interim CEO.

Nagel will remain with the company through July on an advisory basis.

"I want to thank Dave for playing an instrumental role in helping position PalmSource to be a major player in the worldwide mobile software market," Jean-Louis Gassee, chairman of the PalmSource board of directors, said. "We appreciate that Dave is staying on to ensure a smooth transition and wish him the best in his future ventures."

Maureen O'Connell, a PalmSource spokeswoman, would not comment on the executive move, saying only that Nagel stepped down and the board of directors has initiated a search for his replacement.

McVeigh joined PalmSource three months ago, leaving behind his CEO role at Omnisky Corp.

Shaky Postion
PalmSource is currently third worldwide in the number of PDAs sporting its mobile operating system, behind Microsoft and Canadian-based Research in Motion, makers of the BlackBerry. According to a recent report by research firm Gartner, the Palm OS had a 20 percent market share in worldwide PDA shipments, down from 41 percent at the same time last year.

Research firm Canalys, in a report about smart mobile devices (combing PDAs & smartphones) said PalmSource dropped to third place behind Symbian (61.4 percent) and Microsoft (18.3 percent) with 10.5 percent of the market during the first quarter of this year.

That's a decrease from 22 percent for the same period a year earlier. While both Microsoft and PalmSource lost share, RIM landed in fourth place with 7 percent of the market, doubling shipments.

PalmOne, a distant second behind Nokia, tallied 9.4 percent of worldwide smart device shipments—a mere 1 percent increase over the previous year. The mobile device pioneer’s success rests with the popularity of its Treo series of smartphones (up 17 percent) and not its PDAs (down 27 percent).

Linux
Nagel had been trying to reposition himself in the Linux market. In December 2004, PalmSource announced it would acquire China MobileSoft Limited (CMS) and its technology to create a Linux version of the Palm OS.

We expect to hear more about PalmSource's open source plans and its next-generation platform, Cobalt, at the developer conference this week in San Jose, California at the Fairmont hotel. The company previewed some of these plans to PDAStreet a couple of months ago.

PalmSource and Asian handset maker GSPDA showed us the first smartphone built on the Cobalt. GSPDA told us its Cobalt handsets would be more data centric with greater support for 3D graphics and entertainment than its current Palm-based phones. The smartphone is due during the second half of the year.

At the same meeting, PalmSource VP of business development Albert Chu explained a bit more about how the acquisition of CMS would affect the company and the Palm OS in general.

PalmSource would like CMS's applications to become qualified for more standards around the world. For example, its MMS (Multimedia Message Service) application is certified for China but not internationally. It also plans to create a version of Palm OS Cobalt based on a Linux smartphone platform developed by CMS.

Chu told us the company views Linux as a strategic move, one that is also being explored by many handset vendors and carriers, principally outside of the U.S. The Chinese government, in particular, has made Linux support at all levels of technological development an important goal.

From our conversation, it became apparent that the Linux edition of Cobalt might soon become the main version of the Palm platform moving forward. It would be capable of running standard Palm applications through an emulation layer. The company also plans to make as many of CMS’s current lineup of mobile software Palm OS compatible as well.

PalmSource said it would not force licensees to use Palm OS Linux if they don't want too, asserted Chu. The platform developer would continue to support the "regular" version of the Palm Platform in parallel to the Linux edition.