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Is HP Acquiring Palm A Good Idea?

by Sean P. Aune | April 28, 2010April 28, 2010 3:48 pm PDT

It isn’t often that technology bloggers get taken totally off guard, but just such an event has happened with HP acquiring Palm.

As recently as last week, Palm CEO Jon Rubinstein was claiming that Palm would attempt to stay independent, but there was talk that buyers were reviewing a possible purchase and quickly backing away.  Some reports said that Lenovo was still interested in possibly purchasing the company, but no one had even mentioned HP as looking at the company.  Apparently this deal was well hidden because this deal is in an advanced enough stage that the boards of directors for both companies have already approved the deal for $1.2 billion, or $5.70 per share.  Shareholders of Palm still have approve the deal, but it seems unlikely that they will vote it down, and regulatory commissions in the United States and other countries will have to sign off on it, but this is expected to close before July 31st of this year.

hp preAll of this is and well and good, but what does it do for the two companies, and more specifically the end user?  Palm has received many kudos for the WebOS it has developed, but the same can’t be said for the actual Pre and Pixi handsets.  In the meantime, HP has not been setting the world on fire with its iPAQ line that is powered by Windows Mobile.

In a conference call today, HP said it had not yet set out a roadmap for what would happen with the WebOS being integrated with HP devices, or even if that would happen at all, but it is fairly obvious that both companies are at a juncture where they could use a fresh start in the smartphone market.  HP needs new life breathed into it, and Palm needs new handset designs as both the Pre and Pixi now have stigmas attached to them as being pretty much failures; It wouldn’t make any sense for the two lines not to merge under totally new physical designs and names.  While it may not seem to make much sense to launch a whole new line, almost placing them back where Palm was when it launched the Pre, you have the marketing power of HP to go along with it now, as well as the distribution and resources of a much larger company.

It would appear that PC makers who have only dabbled in the smartphone market are getting much more serious about it suddenly.  Just last week information leaked out on Dell launching five new handsets this year, and now you have HP acquiring one of the oldest smartphone makers around.  It would seem that PC manufacturers know the future is all about mobility, and it would appear that HP decided that it might be wiser just to purchase a company with some history instead of just developing its own new line or going with Google’s Android OS that everyone is so in love with as of late.

The true test will be if HP can woo more developers to the platform.  So far the WebOS market only has around 2,000 applications, a far cry from Android’s market, let alone the iPhone’s.  During the conference call, that was mentioned as a significant focus multiple times, and it appears that HP does recognize that as a weakness, but will they be able to convince developers to give this platform more time when it has already let them down?  That’s the big question.

To me, the most puzzling announcement is that Palm CEO Jon Rubinstein would be staying on with the company.  I’ve already wondered if he was a bit crazy, and stating last week the company would stay independent when there was no real need to comment either way makes me wonder about him even more.  I’m not quite clear on why HP feels the need to retain him, but they are.

This is going to be a brave new time for both companies, and it will be interesting to see how each influences the other, but in what it delivers to the stores is all that will matter to us.  Is there a WebOS-powered tablet in our future?  What about a netbook?  Will there be a whole line of WebOS products?  Only time will tell since the two companies are not currently announcing a roadmap, but the possibilities are pretty mind boggling, and quite frankly, also pretty exciting.


Sean P. Aune

Sean P. Aune has been a professional technology blogger since July 2007, but his love of tech dates back to at least 1976 when his parents bought...

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