Press Release

PalmSource and PalmGear Form Strategic Alliance to Advance the Palm Economy

PalmSource sells eBook Subsidiary to PalmGear; PalmGear to Create New PalmSource Online Store

SUNNYVALE, Calif. and Nashville, Tenn., September 3, 2003 - PalmSource, Inc., provider of the popular Palm OS® operating system for handhelds and smart phones and a subsidiary of Palm, Inc. (Nasdaq: PALM) and PalmGear, Inc., the world's largest and longest running Palm OS-based consumer marketplace, today announced a strategic alliance designed to bolster the success of the Palm Economy. As part of the alliance, PalmGear acquired PalmSource's subsidiary Palm Digital Media, and will power a new PalmSource online store and license the "PalmGear," "Palm Digital Media" and "Palm Reader" brands.

PalmGear, together with Palm Digital Media, will provide a strong distribution channel for Palm OS software applications and offer Palm Powered consumers increased access to more than 19,000 applications and over 10,000 eBook titles. The acquisition of Palm Digital Media by PalmGear strengthens its position as the industry's leading provider of third-party content for Palm Powered mobile devices, bringing the company's total software application and eBook offerings to nearly 30,000. In addition, PalmGear anticipates that Palm Digital Media's existing relationships with more than 75 publishers, including industry leaders HarperCollins, Penguin Group (USA), Random House, St. Martin's Press, Simon & Schuster and Time Warner Book Group will enable PalmGear to further expand its current product offerings.

Separately, PalmSource has chosen PalmGear to power the PalmSource Web site's new online store exclusively devoted to Palm OS applications. The agreement provides that PalmGear will provide the backend infrastructure, Palm OS software catalog, and customer and technical support to users purchasing software applications via the PalmSource Web site. The strategic alliance with PalmGear builds on PalmSource's commitment to helping its 275,000 Palm OS developers grow their businesses by offering them an additional sales channel for software applications. PalmSource's online store is designed to provide increased exposure for Palm OS developers to successfully promote and market their Palm OS software applications, while enabling PalmGear to broaden its reach to the millions of users of Palm Powered devices. PalmGear also offers marketing resources, such as the Premier Partner and Growth Programs, that help provide Palm OS developers with the necessary tools to build and maintain sustainable businesses.

"The strategic alliance with PalmGear reinforces our commitment to the Palm OS developer community and supports our effort to make Palm OS applications more readily available to Palm Powered consumers," said David Nagel, president and chief executive officer of PalmSource, Inc. "With more than 29 million Palm Powered devices sold, we believe this is also a compelling way to encourage new uses of Palm Powered mobile devices and fuel growth in the handheld and smartphone market."

"The addition of third-party solutions and content to Palm Powered handhelds is a key driver for the Palm Economy," said Ryan Wuerch, president and chief executive officer of PalmGear. "Our acquisition of Palm Digital Media is a natural evolution for PalmGear as we continue to be the leading provider of applications and content for Palm Powered devices."

"We look forward to joining the PalmGear team as our product lineup complements the large catalog of Palm OS applications and content that PalmGear offers," said Jeff Strobel, director of Palm Digital Media.

About PalmGear
Since 1997, PalmGear has been the world's largest and longest running commercial Internet site devoted to third-party software solutions for the Palm OS platform. With its relationship to more than 15,000 registered Palm OS developers and its high-volume site traffic of more than three million unique visitors each month, PalmGear provides essential distribution services to the Palm OS developer community and encourages the development of new Palm OS solutions to further expand the Palm Powered handheld and smartphone market. For more information, visit PalmGear at www.palmgear.com.

About PalmSource
PalmSource is the company behind Palm OS, the popular operating system for handhelds and smartphone devices. Licensed by industry leaders - including Aceeca, AlphaSmart, Fossil, Garmin, GSL, Handspring, HuneTec, Kyocera, Legend, Palm Solutions Group, Samsung, Sony, Symbol and Tapwave as well as Palm OS Ready Partners including ATI, Intel, MediaQ, Motorola, Samsung, Texas Instruments -- Palm OS has been shipped on more than 29 million handhelds and smartphones, and given rise to a large community of users, enterprises, developers and manufacturers, who together make up the Palm Economy. PalmSource is a subsidiary of Palm Inc. (Nasdaq: PALM). More information about PalmSource is available at www.palmsource.com.