HP Acquires Palm for $1.2 Billion – UPDATED

April 29th, 2010 by Arjan Olsder Posted in Companies & M&A, Platforms: WebOS | No Comments »

PalmBig news for Palm today as the device vendor has been acquired by HP. To many, this move came as a surprise as Lenovo seemed to be the last company in the race for the acquisition.

The $1.2 billion acquisition means HP pays about $5.70 per Palm share. With this acquisition, the future of WebOS seems safe though the Palm brand might fade out over time. In fact, WebOS seems to be one of the primary reason for the acquisition next to a large number of patents owned by Palm. HP is no stranger to the mobile market as they acquired Compaq at the time it was selling a large range of iPaq devices that where the main competitors to Palm.

“Palm’s innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices,” said Todd Bradley, executive vice president, Personal Systems Group, HP. “And, Palm possesses significant IP assets and has a highly skilled team. The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share. Advances in mobility are offering significant opportunities, and HP intends to be a leader in this market.”

“We’re thrilled by HP’s vote of confidence in Palm’s technological leadership, which delivered Palm webOS and iconic products such as the Palm Pre. HP’s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS,” said Jon Rubinstein, chairman and chief executive officer, Palm. ”We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.”

UPDATE – Informa Telecoms has something to say about this as well

“The acquisition of Palm seems to be a good fit for HP, however it will be interesting to see how the combined organisation will operate, particularly as neither HP’s Windows Mobile business focused devices nor Palm’s webOS handsets have been particularly successful in the mobile handset market. I’m not convinced the Palm devices will add much to HP’s portfolio (relatively poor sales, build quality, etc.).

It appears that HP intends to use webOS in other device types, much as Apple has extended iPhone OSX to the iPad, however there are still issues with awareness and applications development, which is paramount to success in the smartphone market. Also, does that mean HP will not make Android smartphones and focus solely on webOS devices? This could prove to be a restrictive strategy in the fast growing smartphone market.

Distribution is key, as Google recently learned. Traditionally, HP has a very good distribution network that will help channel to market but it will need to work closely with mobile operators, a weakness of Palm’s, in order to succeed.”

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    Arjan Olsder is the Vice President of Pixalon Studios. Opinions expressed on this publication do not have to represent those of Pixalon Studios.


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