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29 Apr 2010
After weeks of speculation, Palm has confirmed that it is being taken over by HP in a $1.5bn (£985m) deal. What now for the future of the company that basically invented the handheld computing market in the 1990s?
There is no doubt that Palm was ripe for the picking. The initial enthusiasm for the Pre smartphone wasn't matched by strong consumer demand, launched as it was in the teeth of major pushes by Apple and Google.
The Pixi line was not a huge success either, and Palm has been trying to recover ever since. The company lowered revenue expectations for its third quarter, and posted disappointing financial results.
However, HP was not thought to be among the companies likely to make a move, having made little headway in the mobile computing sphere.
HP marketed a line of PDAs at the launch of Microsoft's first Windows CE operating system, but they were unpopular and, while it has kept up links with Microsoft, the world's biggest PC manufacturer is not a force in handheld computing or smartphones.
So why did HP splash out $1.5bn on Palm? Analysts priced the firm at $1.2bn to $1.3bn (£787m to £853m) and, while numerous companies were mentioned as potential bidders, no-one seemed prepared to buy.
Palm chief executive Jon Rubinstein announced less than a week ago that Palm could survive perfectly well as an independent company, suggesting that he was not prepared to negotiate.
As to what HP is getting out of the deal, the answer is software. Palm has a well-deserved reputation for building hardware people want to use, with designs as good as anything the competition can produce. But HP knows how to do hardware, and it's the webOS operating system that the company wants to control.
HP has always been a Windows customer and says it still will be, but what HP seems to want is the same as Apple: a complete operating system that can be locked around a device.
The smartphone market is growing faster than ever, long-term rival Dell is getting into the market, and HP has obviously decided to jump in too.
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Do you agree?
Will it change Palm?
I've owned and loved my Treo phones even before it was badged a Palm and the iphone wasnt even a glint in Jobs's eye. But one thing that has always been a frustration is network availability, or just simply availability. Its always been a very good product even if a little behind on some basic incorporated features. After loosing their way in the face of the competition they finally come up with the goods only to ruin it with windows, but then they pull the rabbit out of the hat with the Pre. However by then they are up against the wall as others had already put their devices and software in the hands of the masses. So what does Palm marketing do? stem availability again. In the face of what is now very established and well known/used/loved competition the only way they are going succeed is to look long term and get hands on devices, and that's a lot of hands on devices. Hopefully HP may take a leaf out of the Google book and realise the market these days is more than the just the device and get people familiar with the OS and if the right carrot is used the developers and the market share will follow.
Posted by: Phil of Andover 13 May 2010
Palm always needed development capital.
I think Palm has been slowly declining for some years - and I speak as a long-time Palm user. it seemed to me to be suffering from a vicious cycle caused by lack of capital to push and market new killer products, which caused profit decline which further fed the product delays. Having kick-started the handheld market, it didn't do enough to develop or enhance its PalmOS operating system or to introduce new models with compelling reasons to buy. Instead the model range "fiddled around" losing consistency and not keeping pace while competing Windows Mobile devices came into the market. They may not have been as good - but they had the magic "W" word so people felt safe buying them. Indeed Palm lurched away from their own OS to market a Windows-based Treo. And now webOS is yet another new OS, incompatible with what went before. HP may want the software side and for all I know they've acquired a good product. But they will need to move smartly to grab enough market share to have critical mass and to attract 3rd party developers for a apps base. Otherwise the competition will remain between Apple, Android and Windows depending on where you place your product.
Posted by: Duncan 29 Apr 2010