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HP buys Palm for $1.2 billion

Palm users, you can stop worrying about your smartphone vendor's imminent demise: Hewlett-Packard just announced a deal to acquire the company for $1.2 billion.

palm_logo.jpg

The move, briefly heralded on Palm's blog and announced in an HP press release, surprised a lot of people in the tech business. It's not the buyer or the price many observers had guessed. And although HP has been shipping Windows-based mobile devices since 1998, this purchase looks like a vote of no confidence in Microsoft's troubled smartphone efforts.

Palo Alto, Calif.-based HP sees two major benefits to buying its Sunnyvale neighbor, as outlined in a 12-page PowerPoint presentation (PDF). It gets Palm's webOS, an innovative and under-appreciated smartphone operating system that it can also use on tablet and slate computers, and it obtains Palm's extensive library of patents.

An acquisition by HP does not guarantee success, as its purchase of Compaq showed. But HP does have things Palm needed to get some momentum behind its Pre, Pixi and future webOS-based phones: money and marketing resources.

Altimeter Group analyst Michael Gartenberg gave the combination a thumbs-up on his blog for those reasons. He also noted the numerous Palm veterans now working at HP--including former Palm chief executive Todd Bradley--writing that "there should be a relatively smooth transition and overall good cultural fit."

In a quick phone conversation, Gartenberg added that by buying Palm instead of adopting Google's Android software, HP would have its own distinctive smartphone platform--a hardware-plus-software formula that's worked well for Apple and Research in Motion.

NPD Group analyst Ross Rubin made a similar point in a blog post. Rubin wrote that HP would have hard time differentiating phones running Microsoft's upcoming Windows Phone 7 software ("a dilemma from its PC business that it likely had no desire to repeat in the handset space").

Former Palm senior executive Michael Mace, who last week pronounced Palm "failed," blogged that "it could have been worse" but worried that HP could botch the deal later on: "if HP tries to 'help' the Palm folks execute, it will almost certainly drown them in process and bureaucracy."

What's your reaction to the news? Where do you see Palm in two years--a short paragraph in HP's Wikipedia entry, a respected alternative to the iPhone, Android and other mobile-device platforms or something in between?

By Rob Pegoraro  |  April 28, 2010; 4:44 PM ET
Categories:  Gadgets , Mobile  
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Comments

Maybe HP can fund costly and low-yield patent litigation campaign with Palm's patent porfolio that Palm could not. I think this may be a link to many of Palm's patents:

http://bit.ly/ciM13u

Posted by: Bitter_Bill | April 28, 2010 7:09 PM | Report abuse

And start worrying about the software quality plunging

Posted by: hesaid | April 28, 2010 7:09 PM | Report abuse

I see Palm as a hanger-on in two years. It will not catch up with Apple and Android, but may be competitive with Microsoft Mobile and Nokia's confusing software options.

This will turn on execution. HP tried reselling the iPod initially, but failed. It must focus on Palm's software superiority to IPAQ while using its greater sales reach.

Posted by: query0 | April 28, 2010 7:58 PM | Report abuse

HP seems to have a clear business model - if you can't do, buy. Compaq, EDS, now Palm. It seems like a last ditch effort to remain relevant. It could work but I doubt it.

Posted by: slar | April 28, 2010 9:57 PM | Report abuse

I read a comment elsewhere that said, "two dinosaurs waiting for the meteor to strike" I think it may be true. fittlives from Vancouver http://www.fittlives.blogspot.com/

Posted by: fittlives | April 29, 2010 12:02 AM | Report abuse

Hey HP, perhaps you would be interested in buying my 6 year old Ford for $200,000?

Posted by: Booyah5000 | April 29, 2010 6:24 AM | Report abuse

This is good, if not great, news.

I've been a Palm user since the beginning, now using a Treo 700P (my wife has a Centro). It's a very durable phone/PDA that does all I want and need in a form factor that is very workable for my tired eyes and arthritic fingers (smaller and sleeker is not necessarily better).

Marketing is what it's all about. It will be interesting to see how HP moves forward.

Posted by: wd3q | April 29, 2010 10:04 AM | Report abuse

I am a long-time Palm customer (currently using Palm Pre) and I think this is good news. It was becoming clear that Palm would not survive on its own. Some of the rumored buyers did not bode well for continued development of WebOS (HTC, RIM). At first blush, it appears that HP wants to keep WebOS. Hopefully, they will also improve Palm's hardware.

Posted by: FormerArlingtonian | April 29, 2010 11:49 AM | Report abuse

Maybe HP can build an ultra-powerful smart phone using the Itanium processor. They have to unload all those chips some way or other...

Posted by: seismic-2 | April 29, 2010 12:48 PM | Report abuse

Bye bye Palm, you had your chance back in 1999-2004 not anymore.

Posted by: eaglestrk01 | April 29, 2010 4:00 PM | Report abuse

Rob, are you still using your old Treo?

Posted by: ssolomo | April 29, 2010 4:32 PM | Report abuse

I was a devoted Palm user for years, and eventually decided to switch to a Treo 700w. Although the Windows Mobile system was a bit cumbersome, it worked well enough with Outlook. The real gem was the phone itself -- it had every bell and whistle I could ever want (including being backwards compatible with my Palm Wi-Fi stick which used the SD slot), and was AMAZINGLY rugged. I have dropped the phone numerous times, even into a puddle once, and it just keeps chugging along. I have now finally retired the old warhorse (which still works btw), and gotten a Motorola Droid, which I love. Palm was a poorly run company that actually made really good products -- its kind of a shame really.

Posted by: carpiodiem | April 29, 2010 5:19 PM | Report abuse

Given HP's history with its iPaq line, MAYBE they will come out again with a non-phone PDA with Wi-Fi and Bluetooth -- and a Palm Desktop DATA MIGRATION spec -- for those of us who don't want to spend a thousand bucks a year for a wireless data plan to check our calendars, read our e-mail, and listen to our music on the go. Apple seems to be doing fine with its iPod touch. The classic Palm PDA apps were always touch-driven (via a stylus). But webOS has true multitasking, a component which was promised but missing from the last version of Palm OS ("Garnet"). And their PDAs would, unlike the iPod touch, accept expansion memory cards. A couple of Palm models even had (again unlike the iPod touch) cameras.

But phones, not so much. Maybe they will call the rebranded phones the HPre and HPixi...

Posted by: 54Stratocaster | April 29, 2010 10:22 PM | Report abuse

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