Hewlett-Packard has agreed to purchase the struggling Palm for $1.2 billion, the companies announced late Wednesday, and HP had to make a move like this to stay relevant in a rapidly changing environment.
The deal will give HP a strong brand name, a litany of patents, and an operating system (webOS) that has some great ideas for how to interact with smartphones. We’re in an era of convergence folks, don’t kid yourself. Google has said smartphones will make desktops irrelevant in three years and that has computer makers shaking in their boots. If you look at all the top desktop makers (HP, Dell, Lenovo, Acer), each major player now has a clear mobile strategy.
Of course, all these guys are trying to replicate the success of Apple’s iPhone. The handset was only introduced a few years ago but it now accounts for a whopping 40% of all of Apple’s revenues. This is only expected to grow as more and more consumers adopt these smart mobile devices. Dell is stepping up its game in this space from what we’ve seen with the Thunder.
For Palm, this will finally give it the resources it needs to push webOS at scale. With Google, Apple, Microsoft, Research In Motion and Nokia in the game, the smartphone space is rapidly becoming a waltz of elephants. This deal gives Palm products true global reach and a respected backer. Palm CEO Jon Rubinstein will stay with the company in some capacity but it’s unclear how big of a role he will play.
The deal makes a lot of sense but there are still many questions. First of all, who is going to be in charge of the hardware? Sure, webOS is the best 1.0 smartphone OS, in my opinion, but the hardware wasn’t up to snuff. The iPAQ series of smartphones has failed to do more than grace the pages of a few press releases, but the Palm Pre is something of a media darling – a media darling that has failed to catch on in the consumer space. HP’s Windows Mobile-powered iPaq lineup hasn’t lit the world on fire -even if it was aimed primarily at enterprises. HP’s quietly better at software than we think (check out its printing app for BlackBerry), so it will be interesting to see how it evolves the webOS.