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Palm Responds to the iPhone

SAN FRANCISCO, March 8 — Palm Inc., the maker of hand-held computers, has hired a top Silicon Valley software designer as it seeks to respond to the challenge posed by Apple’s new iPhone.

The designer, Paul Mercer, a former Apple computer engineer, began work three weeks ago at Palm on a line of new products, a company spokeswoman said, but she declined to comment further on the project.

Mr. Mercer, 39, joined Palm with two employees from Iventor, the independent design firm that he headed in Palo Alto, Calif., but Palm did not acquire the company, said the spokeswoman, Marlene Somsak. Palm is based in nearby Sunnyvale.

Apple’s iPhone is still several months away from being available, but its flexible interface is already shaking up the cellphone industry, including Palm, which makes the hybrid phone-organizers known as smart phones.

The Prada phone from the South Korean consumer electronics maker LG offers some similarities to the iPhone, and industry analysts have said that the Apple phone will force the industry to shift its focus from hardware to software design.

Although Palm pioneered the market for hand-held computers, the company has found itself under pressure in recent years by some of the most powerful names in consumer electronics, including Sony Ericsson, Motorola, Nokia and Microsoft.

Last year Palm gave ground in its struggle and adopted Microsoft’s Windows Mobile software for one version of its Treo smart phone.

The company’s own Palm OS software is widely seen within the industry as aging and in need of a fundamental revision.

Mr. Mercer, a college dropout, joined Apple in 1987. While there, he was the lead designer of Version 7 of the Macintosh finder, the operating system’s graphical desktop. He later founded Pixo, a software tools firm that created a development system used by Apple software designers to conceive the first version of the user interface for the iPod music player.

More recently, as an independent designer, he worked under contract with Samsung to design the Z5, an MP3 player that has been a best seller in South Korea. He has developed a reputation for designing interfaces that have cinematographic qualities and yet perform briskly on small consumer electronics devices.

“He’s the best of the best in this space,” said Paul Saffo, an adviser to Samsung and a Silicon Valley forecaster. “The guy has a knack for designing complex systems in ways that are accessible.”

On Monday The Wall Street Journal reported that Palm had retained Morgan Stanley to explore options, including the sale of the company. Palm declined to comment.

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