Palm Acquires peanutpress.com, Becomes a Leading eBook Content Provider for Handheld Computers

Palm Reader to Ship with New Palm m500 and m505 Handhelds; Palm Announces Limited-time Introductory Offer of Stephen King`s DREAMCATCHER for Just $14.95

SANTA CLARA, Calif., March 19, 2001 -- Palm, Inc. (Nasdaq: PALM), a pioneer in the field of mobile and wireless Internet solutions and a leading provider of handheld computers, today announced that it has acquired peanutpress.com, Inc., a leading eBook publisher and distributor of an extensive selection of eBooks for handheld computers. peanutpress offers titles from many of the major commercial publishing houses and, prior to the acquisition, was a wholly owned subsidiary of Boulder, Colo.-based netLibrary, Inc.

Financial terms of the deal were not disclosed.

This union makes Palm a leading eBook distributor for handheld computers in the emerging eBook space. The move -- part of Palm`s strategy to deliver end-to-end handheld computing solutions -- enables the company to expand the use of eBooks by consumers and mobile professionals, and in the largely untapped education space.

While the eBook space is still fledgling, a December 2000 Forrester report stated that "Digital delivery of custom-printed books, textbooks and eBooks will account for revenues of $7.8 billion -- 17.5 percent of publishing industry revenues -- in five years."

The deal includes a web-based storefront containing a growing list of 2,000 titles from most of the major U.S. publishing houses. It also includes the Peanut Reader, the leading eBook reader application, which runs on Palm OS(R) handhelds using Palm OS 3.0 and higher, as well as on Pocket PC handhelds. Peanut Reader and peanutpress.com will be called Palm Reader(TM) software and Palm Digital Media, respectively. Palm Digital Media, which will become a group within Palm, will retain the 17 peanutpress.com employees and remain in Maynard, Mass., where it is currently based.

"This is an empowering opportunity, one that will allow us to help people make the most of their on-the-go-time," said Mike Lorion, vice president of Vertical Markets for Palm, Inc. "Leisure readers, business professionals honing job skills, commuters catching up on the Wall Street Journal, or students backpacking 20-plus pounds of books can benefit from being able to carry reading materials in a device that weighs only ounces and also manages the rest of their information. Additionally, this is exciting because it reflects the commitment of two leaders, Palm and netLibrary, responding to customer demands and working to move the eBook space forward."

The company also announced that Stephen King`s latest novel, DREAMCATCHER, will be introduced simultaneously as a Palm eBook and as a hardcover book. The introduction is slated for March 20 at 12:01 a.m. EST. Until March 23, Palm will offer DREAMCATCHER for a special introductory price of just $14.95 (U.S.).

Gregory Voynow, senior vice president and general manager of iPublish.com at Time Warner Books said, "We`ve been selling eBooks through peanutpress.com for almost two years, and we believe Palm`s endorsement of the eBook space by owning both the platform and being a leading eBook distributor for handhelds is a strong signal that this new market will enjoy healthy growth in terms of readers and titles for years to come."

eBook Applications

Consumer -- Palm Digital Media already has a very strong presence in the consumer space, and Palm Reader is a very popular application for novels and business books. Current best-selling authors include Michael Crichton, Scott Turow, Anne Rice, Michael Connelly and Stephen King. Palm also offers a monthly or quarterly weekday subscription to the Wall Street Journal and several magazines.

Mobile Professional -- The mobile-professional area also is ideally suited to eBooks as more and more mobile professionals need to stay current with the latest business information while traveling or commuting. Palm intends to expand its offering of business books because of increasing demand. Additionally, companies can convert and produce their own content for publishing manuals, training guides and human resource materials accessible in an eBook format, using Palm`s development tools.

Education -- Palm Reader provides an ideal reading platform for learning and teaching. It can be used for a variety of reading applications, including textbooks, study guides and classroom handouts. Palm expects students and teachers in K-12 schools and in universities to gravitate quickly to eBooks as more academic books and materials become available in this format. Palm also expects academic eBooks to span the curriculum and include such specialty areas as law, medicine, and SAT and GMAT preparatory materials.

Palm Reader to Ship with New Models

Palm Reader will ship in the box with the newly announced Palm m500 and m505 handheld computers, along with two eBooks, Tarzan of the Apes, by Edgar Rice Burroughs, and 12 Valuable Ways to Use Your Palm, from Velocity Business Publishing. Palm Reader, which can be used to view electronic books on either Palm OS or Pocket PC handheld computers, has easy-to-use features such as auto-scrolling, bookmarks, standard and large fonts and selectable viewing orientations. Palm Reader will continue to support Pocket PC in addition to Palm OS.

More information, including how to download free Palm Reader, is available at www.palm.com/ebooks. Existing customers can continue to access their accounts and purchase eBooks at www.peanutpress.com.

About netLibrary

netLibrary (www.netLibrary.com) is the leading provider of eBooks and Internet-based content management services designed to fit the missions and methods of libraries and the publishers who work with them. netLibrary develops, archives, hosts, and securely distributes eBook collections on behalf of hundreds of publishers of academic, reference, scholarly, and professional books. More than 5,000 corporate, academic, public, and K-12 libraries currently utilize the netLibrary platform to offer eBooks to their employees and patrons.

About Palm, Inc.

Palm, Inc. is a pioneer in the field of mobile and mobile and wireless Internet solutions and a leading provider of handheld computers, according to IDC (December 2000). Based on the Palm OS(R) platform, Palm`s handheld solutions allow people to carry and access their most critical information with them wherever they go. Palm(TM) handhelds address the needs of individuals, enterprises and educational institutions through thousands of application solutions.

The Palm OS platform is also the foundation for products from Palm`s licensees and strategic partners, such as Franklin Covey, Handspring, IBM, Kyocera, Sony, Symbol Technologies, and TRG. Platform licensees also include Nokia and Samsung. The Palm Economy is a growing global community of industry-leading licensees, world-class OEM customers, and more than 145,000 innovative developers and solution providers that have registered to develop solutions based on the Palm OS platform. Palm went public on March 2, 2000. Its stock is traded on the Nasdaq national market under the symbol PALM. More information is available at http://www.palm.com.

Ronni Sarmanian -- Corporate
Palm, Inc.
408.326.0600
ronni.sarmanian@corp.palm.com

Kathleen Dixon -- Education
Dixon Communications for Palm, Inc.
408.871.7765
kathleen@kdixon.com

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Palm OS is a registered trademark and Palm Reader and Palm are trademarks of Palm, Inc. or its subsidiaries.

This press release contains forward-looking statements within the meaning of the federal securities laws, including statements by Palm and other parties about the growth in the use of eBooks generally and the growth of the use of eBooks in the consumer, enterprises and education sectors, the release of eBook titles by both Palm and other publishers, the release of Palm`s m500 and m505 products, Palm`s continued support of Palm Reader for the Pocket PC platform and the ability of eBooks to provide increased productivity for users. These statements are subject to many risks and uncertainties, including those related to the integration of peanutpress.com, Inc.`s technology and employees into Palm`s operations and infrastructure, possible development or marketing delays with the products or solutions to be offered, potential defects in the products or solutions to be offered, the public`s acceptance of eBook technology and demand for eBooks and related products or solutions, continued access by Palm to existing book and magazine titles and increased access to additional book and magazine titles from publishers, Palm`s ability to publish new Palm Reader versions of additional book and magazines titles, licensing of Palm Reader book development tools by other publishers and users and publishing of book and magazine titles in Palm Reader format by publishers, continued access by Palm to Windows CE development technology and other risk factors described in Palm`s quarterly and annual reports and other filings with the Securities and Exchange Commission.