HP Buys Palm: The Optimist's View

By  |  Wednesday, April 28, 2010 at 1:48 pm

Wow. The rumormongering about Palm ends today: HP is buying the struggling mobile pioneer for $1.2 billion. One of the largest tech companies on the planet will own WebOS, one of the best available mobile operating systems–but one which has failed so far to make much of an impact as it’s shipped on Palm’s Pre and Pixi handsets. It qualifies as a shocker given that most of the scuttlebutt about possible purchasers involved Asian manufacturers such as Lenovo and HTC.

When a huge old-school company buys a scrappy (relatively) little one, my instinct is always to be worried. There are far more examples of such mergers failing than there are of ones that have thrived. And there aren’t many examples of companies in distressed condition getting turned around big time.

But let’s play optimist for a moment…

When it comes to phones, HP is a blank slate. Yes, it makes a couple of obscure Ipaq handsets, but HP hasn’t really ever tried to get into the phone business. Those Ipaqs are, basically, targeted at big HP corporate customers who might buy HP phones if they’re available. With no serious HP heritage in phones, there’s no need for a messy merger of product lines and technologies. The DNA of HPalm phones will come mostly from Palm, and that’s good.

It makes sense for HP to own a mobile OS. Integrating hardware and software appears to work fairly well for Apple, no? I can see why a company with enough bucks to buy an OS would prefer to do so–especially with all the nasty legal warfare going on among intellectual-property owners. And HP bought itself a really good OS.

HP might be able to take WebOS places that Palm couldn’t. After the Foleo fiasco, Palm quite reasonably chose to stick to its smartphone knitting. As a much larger, more prosperous company, HP might reasonably decide to put WebOS on slates or set-top boxes or other devices that Palm would likely have avoided.

A Palm without a little cloud over its head is a good thing. With the era of uncertainty over the company’s viability over, retailers may be more excited about stocking Palm products, and consumers may be more confident about buying them.

I can’t think of an outcome that would have been clearly better. Okay, I wish Palm had been able to stay independent–the happiest ending for this story would have been it bouncing back on the strength of its products. But that didn’t seem to be in the cards. And I can’t think of another company with a billion dollars to spare that would have clearly taken better care of Palm’s assets.

The last time Palm was acquired, it worked out okay. The first time I ever met with the company was back in 1995. Execs told me about the first PalmPilot–not yet called that–and said that the company had just been bought by USRobotics. It was the beginning of Palm’s greatest era, and hey, that’s a precedent!

Your take?

 
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15 Comments For This Post

  1. Keith Shaw Says:
    April 28th, 2010 at 2:18 pm

    You should do a posting that says “The Pessimist’s View” as well.

  2. Hamranhansenhansen Says:
    April 28th, 2010 at 3:37 pm

    I think it’s smart to be optimistic about this deal.

    Palm was about to go belly-up, they need another reboot, and HP is big enough to do it. HP ships a ton of hardware, but it’s almost all disposable because of the software. HP has done a lot of touch work, but it’s all weighed down by Windows and Intel. Palm gives them a bridge into the future.

    > It makes sense for HP to own a mobile OS

    Definitely. I think it also makes sense for them to rebrand it “HP OS”, expose a native C API, and put it on all their systems. On Intel systems, they could build in a virtualizer for users to run Windows and Windows apps if they want to, similar to how Apple had Classic that ran Mac OS 9 and those apps.

    Windows is clearly going away, HP needs to get ready for that. People have been waiting for an upgrade to XP for years, and it’s mobile tablets. I’ve already seen this happening at the company where I’m consulting right now. Executives who refused to go to Windows 7 school have brought in their own iPads and replaced XP themselves, with zero training, zero I-T hours, and zero future OS licensing fees. They stopped using their XP desktops and notebooks entirely. While I-T is having meeting after meeting “how are we going to get onto Windows 7?” the users are moving onto iPad themselves. A few years ago they were 100% Blackberry phones, and now they’re 60% iPhone, 40% Blackberry. That is happening again with iPad versus XP.

    You can make an argument that a nerd still needs a PC once they get an iPad, but there is no reason for business users to continue to use a PC. WebEx on iPad is a kind of crack for business users. Keynote on iPad is a crack-making machine. Salesforce on iPad? Biz Dev crack. They love the calendar, they love the contacts, they love the browser, and they love the apps. The battery life and mobility have changed their perception of computing. They see their XP PC as a computer for dinosaurs, it belongs in a museum next to IBM Selectric.

    If you take off your technologist’s glasses and consider what it’s like for a business user to go from a 2001 PC (which is what they’re all using) to a 2010 iPad … they’re not going back.

    So HP has a chance to get in on this if they think big, if they reinvent themselves around mobile computing. Otherwise, Apple is going to be the biggest name in business computing in a few years. Business computing is all going mobile.

    > decide to put WebOS on slates

    From what they’ve announced about their Slate product, it’s twice the size and weight of iPad, and it gets less than half the battery life. It also requires PC level I-T, whereas iPad requires iPod level I-T, which is literally 1% of the work. And HP Slate gets viruses, it runs software that expects you to have a mouse and keyboard and Core 2 Duo, when you have touch and virtual keyboard and Atom.

    If HP is interested in touch and mobility, they have to get into ARM, they have to do a Palm Slate. Hopefully that is why they bought Palm, not just to get into the phone business, but to get into full-scale mobile computing.

  3. Jared The Geek Says:
    April 28th, 2010 at 4:41 pm

    So just imagine this. You work in a corporate environment and you have HP networking and wireless deployed and your HP WebOS phone seamlessly transitions to VOIP when you walk into the office.

    I am excited for a WebOS Tablet ala iPad style. WebOS is great and with HP I think its a real win for the consumer. Sorry but Android does not hold a candle to WebOS. Open is great and all but will only carry you so far. And this from an MS fanboy.

  4. Funny Stuff Says:
    April 28th, 2010 at 4:58 pm

    HP today announced that it will acquire Palm in a deal valued at $1.2 billion.

  5. Gopu Says:
    April 29th, 2010 at 2:36 pm

    Good for HP.. They got their footstep into the OS,Mobile arena… Good for Palm the WebOS has now greater reach out..

    Hopefully we can see WebOS playing around not only on just Mobile Phone.. but other HP gadgets too..

  6. barrgg Says:
    April 30th, 2010 at 11:25 am

    Hamranhansenhansen is smoking some good crack. The iPad is not replacing Windows… HAHAHA. Ok, right, because using an onscreen touchscreen while staring down at a device on your desk makes a lot of sense. The iPad will be a valuable device in circumstances, but it will not replace Windows. You’re an idiot. If it was going to replace Windows, then it would replace Mac OS X as well. Do you realize what an idiotic idea that is? I guess Apple is going to announce that all their products have been discontinued except the iPad, iPhone and iPod, huh? Or maybe they’ll just discontinue OS X and the iPhone OS will become standard on the MacBook, iMac, Mac Pro, etc. A tablet is good for someone not doing any work, or for people giving presentations only (the same as not doing any work). Give me a list of professions that would work more efficiently with an iPad over a desktop or laptop. I have to say it again – YOU’RE A MORON.

  7. theWizard Says:
    April 30th, 2010 at 8:07 pm

    Wow.

    My favorite Calculator Company HP (41CV, 42S, 48GX, 12C, etc) buys my favorite phone company (Treo 700P, Centro, Pre, etc).

    I hope this works out. Palm has some good ideas and just needs some help that maybe HP can give it.

    Maybe if HP would put the Free42 software on every Palm phone they sell they could corner the Engineer/Geek market.

    Or maybe just bring back the 42s calculator. Have you seen what those things sell for on ebay?

    Long Live HPalm

    Cheers

  8. Tom Ross Says:
    May 1st, 2010 at 4:53 am

    barggg:

    Despite your quibbles, multitouch screens have tremendous advantages and are shaping up to be the next stage of computing, superceding the mouse GUI for most uses. Some details of implementation still have to be dealt with, but Apple nailed most parts, while Windows 7 is not anywhere near being usable as a touch OS.

    I’m sure that Hamranhansenhansen was thinking of the Mac as well. Over time, Apple will move the Mac more and more back into the professional and high-end corner, while many Mac customers will start buying iPads and replace their Macs later, if at all. Mac sales will probably stall, while PC sales will start to shrink. The Mac will gain market share in a shrinking market.

    You have to realize, that mainstream PC sales are already shrinking right now, while only Netbooks at the bottom and Macs at the top are growing. The Netbook wave, being nothing more than a low-quality Windows XP reprise, will run out and tablets will go on take over 2/3 of the consumer and educations markets as well 1/3 of the professional, corporate and government markets within the next 5 to 10 years.

    Bill Gates saw this coming 10 years ago, when he introduced the Tablet PC. He just wasn’t able to deliver the right OS and hardware. Apple is ready to deliver now, while HP and others will follow in their slipstream, sans Windows.

  9. R.D.Rush Says:
    May 4th, 2010 at 8:16 pm

    Palm definitely needs direction in some areas that seem to me to be scattered.

    I think that HP will definitely enforce some business oriented focus that I have seen Palm really lacking. The “Web O.S.” is pretty savvy and doesn’t really need to fall to the way-side like so many Palm projects have in the past.

    Palm, like Java, has been victimized by closed thinking and is now the evident victim of poor decision making on managerial and marketing fronts.

    Kudos to HP for picking up the slack; with any hope and HP’s iron gauntlet business style the Palm platform and “Web O.S.” will get not only a second chance but also a voice. It should be quite exciting to witness the Palm Developer community thrive with HP.

    The developers will no longer be a marketing figure head/corporate shadow organization in HP company; the learning curve will be mutual but, rewarding for both groups I am certain.

  10. Millie Wood Says:
    May 27th, 2010 at 6:21 pm

    Mobile computing is on the rise these days. Maybe we will get a dual core powered cellphones in the future.”‘*

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