HP to buy Palm, shake up the mobile world

Under HP's ownership, Palm devices could once again hold prominence in the mobile landscape.

HP's purchase of Palm could not only save webOS, but should also cause a few shivers for Microsoft.

Where Redmond may have lately seemed the up-and-comer to challenge Blackberry with its Windows Phone 7, HP--by virtue of its hardware sales--may actually be in a better position. HP will, however, have to learn a thing or two about integrating mobile devices with the desktop, and particularly with Microsoft Exchange servers.

HP is paying nearly $1.2 billion for Palm, a premium of nearly 25 percent. Some Palm shareholders are unhappy at the low price. But, given the company's dismal performance, this is certainly the best bailout they were going to get. Meanwhile, HP shares dropped to $52.68, just over 1 percent, in afterhours trading.

HP's investment is a tremendous endorsement of Palm's webOS operating system. In fact, it's the only future possible the OS, as many other firms turned down an opportunity to put Palm out of its misery. HP CEO Mark Hurd's task is to make them wish they had.

It's strange that a company as successful and diverse as HP has become under Hurd isn't more of a player in consumer mobile devices. Palm for all its troubles gets high marks for its hardware and operating system. Having HP as a parent could provide the muscle Palm has lacked in the marketplace.

HP has only limited success with its iPaq line of mobile devices, although they have been generally well received and attractive to HP's business customers. By comparison, a Palm Pre and its successors should be an easy sell.

The task for HP is to take a come-from-behind position and leverage webOS into products that expand the company's presence in both business and consumer markets. For a model, HP need only look at Apple which at one time was in essentially the same position that HP found itself in before buying Palm. Granted, the world has changed greatly since then, mostly because of Apple's ability to dominate the consumer market, but except for Research in Motion, nobody has really captured the imagination of corporate customers. By building a consumer-y smart phone with loads of business features, HP could do Blackberry one better and challenge whatever Microsoft does with Windows Phone 7.

Palm CEO Jon Rubinstein will stay on, which is a mixed blessing. If Rubinstein and company had done such a great job, it wouldn't need HP. Of course, HP is unlikely to repeat the sorts of amateurish mistakes that have marred Palm's product introductions, including its decision to introduce the first Palm Pre only days before Apple introduced the iPhone 3GS.

More Investment To Come

The downside for HP is that it may be too late. The company can expect to make large investments if it hopes to snatch a victory from the jaws of Palm's defeat.

The key to success will be creating an ecosystem that includes music and application stores which only Apple and to a much more limited extent Google have been successful at doing. It seems like someone will eventually get this right, but formidable barriers exist and Apple seems intent on erecting more. This includes the recent requirement that iPhone apps be built using only Apple's tools, limiting a developer's ability to build applications that run on the iPhone and other platforms.

So far, developers have shown little interest in webOS, and HP must find a way to create interest which hasn't existed before. The only real way to do this is to sell a bunch of handsets--but why would customers want to buy a handset with such limited application support? So it becomes a chicken-and-egg situation for HP.

The best thing about the deal is the number of potential choices that it will offer businesses and consumers. HP has a solid operating system to work with, but a business that essentially fell flat. Having turned HP around, CEO Hurd may be right guy for the job.

Silicon Valley mergers generally turn out to be bad ideas, although HP did manage to turn its acquisition of Compaq into a deal that made at least some sense. Whether it can do that with Palm is a question that will be answered over the next several years.

David Coursey has been writing about technology products and companies for more than 25 years. He tweets as @techinciter and posts to Facebook. He is best contacted via his Web site.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags smartphonesHPwebOSPalmHP-Palm acquisition

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

David Coursey

PC World (US online)
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?