Palm has spun off its software business to encourage more manufacturers to license its Palm OS for PDAs (personal digital assistants).

The software development and licensing business, called Palm OS, will now be completely separate from the hardware business, called the Solutions Group, Palm said.

Palm OS becomes a wholly-owned subsidiary of Palm. David Nagel has been named as the subsidiary's president and CEO, said Franck Gaget, Palm's senior manager for European marketing. Nagel was previously chief technology officer for AT&T, and president of AT&T Labs. He has been on Palm's board since September.

Joint finance While the two companies, Palm OS and Solutions Group, will share departments such as finance and human resources, they will report results separately, Gaget said.

The split will clear up any possible conflicts of interest between the hardware and software divisions, Gaget said. The Solutions Group will become a licensee of Palm OS and will have the same rights and obligations as any other licensee, he said.

According to Palm, over 20 million devices using its OS have been sold worldwide. Over 80 per cent of handhelds sold in the US in November were based on the OS, the company claims.