HP Acquires Palm For $1.2B, Long-Term Plans Unclear

By  Evan Koblentz — April 28, 2010

April 28, 2010
First there was Jeff Hawkins' way, and now Palm will be living The HP Way, in a $1.2 billion acquisition announced today.
"HP intends to be a leader" in the evolving smartphone market, Hewlett-Packard's Todd Bradley, executive vice president of the personal systems group said in a statement.

Palm has been for sale since shortly after its WebOS arrived in June 2009 and failed to beat Apple iPhone and Google Android devices. But HP did not state how it plans to accomplish leadership.
VDC analyst David Krebs says this is HP's last chance to be relevant in the smartphone market.
"It all depends on how you define 'leader'," Krebs said. "I think there are a lot of pieces that Palm brings to the table that are very attractive, but as they stand right now there's a lot missing," such as a developer ecosystem, he said. HP probably has 12-18 months to succeed, although it's not clear why HP even needs its own mobile operating system, he noted.
Palm dominated the standalone PDA market in the late 1990s, and was acquired by modem maker U.S. Robotics and later by networking specialist 3Com. Hawkins, the founder, split off and started Handspring, which later merged back into Palm.
But the simple PalmOS lagged behind other smartphone systems.  The newer WebOS is widely considered a technically superior product, but it arrived too late for market success.
There is a chance that WebOS' HTML focus may come full-circle and be in demand in the future, Krebs added. But by that time, Android may dominate.
Today's deal, at $5.70 per share, is already approved by both companies. It is expected to close by the end of July.


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