PalmSource (Quote, Company Info), the provider of the operating system for handheld devices and smart phones that is the midst of being spun off as a separate company, said it formed a strategic alliance with PalmGear, a leading resource for freeware, shareware and commercial software for the Palm OS platform.

As part of the new arrangement, PalmSource is selling off its Palm Digital Media or eBook subsidiary to PalmGear.

The aim is to create a new online store and improved distribution channel for Palm OS software applications, as well as providing news, product details and information useful to both developers and customers.

One pillar of the new arrangement will be PalmGear's ability to leverage some of Palm Digital Media's previous licensing arrangements for eBook content.

The partners in the deal said they will "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."

PalmGear anticipates that Palm Digital Media's existing relationships with more than 75 publishers, including industry leaders HarperCollins (Quote, Company Info), Penguin Group (USA), Bertelsmann's Random House, St. Martin's Press, Simon & Schuster (Quote, Company Info) and Time Warner Book Group (Quote, Company Info) will enable PalmGear to further expand its current product offerings, the companies said in a press release.