Palm chief executive Carl Yankowski has resigned and will be replaced by current chairman Eric Benhamou while the search for a successor takes place.
"With Palm's transition into two individual businesses almost complete, my role has changed and it no longer matches my aspirations," said Yankowski in a statement. He did not announce his future plans.
The company faces increasing competition in the handheld market from Handspring, Microsoft CE-based devices and mobile phone manufacturers such as Nokia.
Most customers are waiting to see what new products Palm will develop in the areas of wireless and voice, explained IDC research analyst Tim Mui.
"With the number of handheld vendors that will be out there by next year things aren't looking very certain. Things haven't been great for Palm for a while," he said. "Part of the problem with Yankowski was he didn't come from a technology background and because of that [Palm] relied a bit too much on marketing."
Mui explained that Palm is trying to move into the enterprise space, but is finding it increasingly difficult, whereas "Pocket PC and Nokia are looking very strong".
Palm also announced that it is in the final stages of its internal separation into two businesses. The Solutions Group is responsible for designing the Palm family of handhelds, while the Platform Solutions Group will develop and license the Palm operating system.
By the end of this year the Platform Solutions Group will be an internal subsidiary of Palm, a move aimed at increasing focus.
Palm said it is still on target to deliver its second fiscal figures in line with the revenue guidance provided in September 2000.
The company continues to be the top vendor in the handheld market worldwide but has experienced a slight loss in market share, according to Gartner Dataquest.
The Palm operating system accounted for 52 per cent of worldwide handheld sales in the third quarter of 2001, down three per cent. Microsoft Windows CE shipments accounted for 18 per cent, down from 30 per cent in the previous quarter.
Gartner Dataquest said the launch of the Pocket PC 2002 operating system may have hit demand for Windows CE handhelds as customers held out for the new software.
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