Huawei may snap up Palm

Well, this is interesting. A Reuters report said Palm contacted the Chinese telecom giant Huawei about a possible acquisition in mid-February.

Huawei is not that well known in the United States but it is a major telecom infrastructure provider in China and it’s itching to get into the U.S. market in a big way. Acquiring the struggling Palm would make a ton of sense because it still has a relatively good brand in the states and Huawei has the resources to eat as many losing quarters as it takes to get it right. This type of move wouldn’t be unprecedented, as Lenovo was mostly an unknown here until it purchased the ThinkPad line from IBM,and now it’s a common brand.

Analysts say Palm is roughly worth about $1 billion dollars because of its assets and litany of patents. We’ve also heard speculation that HTC and Lenovo are also interested, which may lead to a bidding war. In fact, the skeptic in me thinks these rumors are all strategic leaks to the press to drive up the price.

Unfortunately, all this acquisition talk could hurt Palm in the short term because it may take its eye off the ball when it comes to software improvements. I still think webOS is the best 1.0 smartphone platform I’ve ever seen but its competitors aren’t on 1.0 anymore. CEO Jon Rubinstein said the company is investing heavily in research and development but all the rumors and speculation have to be impacting morale. Long term, a deal will give Palm the resources and scale to compete against the likes of Apple and Research In Motion.

[Via Reuters]

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