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A Smart Phone Partnership? Palm And HP

June 18, 2010

Palm may have been the grandfather of PDAs and smartphones, but they haven’t been doing well. Therefore, the Palm HP partnership couldn’t have come at a better time. This $ 1.2 billion pay day purchase of Palm, HP is acquiring the Palm operating system, intellectual property, and phone handset designs.

HP purchase saves faltering Palm

The partnership of HP Palm could not have been better-timed. Despite receiving standing ovations and great reviews for its new operating system and web browser, Palm has been struggling. Palm’s revenues have been falling to very dangerous levels, thanks to slow sales and a badly-reviewed design. The latest SEC filing of Palm outlined the problem – slow sales and low order volumes.

HP’s plans for Palm

The HP Palm purchase has been questioned by some Wall Street investors. Paying over $ 5 a stock for a company with a $ 1 stock in 2008 seems a little odd. It seems that HP definitely has plans for the Palm operating system, though. In the HP Palm purchase announcement, HP outlines its strategy as “creating a mobile ecosystem” that “leverages HP’s channel and enterprise connections”. Translation – HP may be distancing itself from being a Windows-only manufacturer and entering the phone, tablet, and mobile markets.

HP Slate to run on Palm OS?

Hewlett Packard has been a “strategic partner” with Microsoft for a long time — but the HP Palm partnership might distance this relationship. The HP Streak may require an operating system that is more “lightweight” than Windows. The Palm OS was designed for a phone, so it would be a good match for the soon-to-be-released Streak 3. This would also release HP from Window’s regulations and release delays. Though Apple’s dominance is difficult to challenge, Palm and HP partnering may be able to make a go of it.

HP Palm to merge in July

The HP Palm purchase still has a lot of hurdles to jump over. Both boards of directors have approved the purchase. At the same time, stockholders and regulatory agencies still need to approve the merger. If the HP Palm merger is approved, HP will become complete owner of Palm around July 2010.

Resources for the article

HP Press Release

Palm SEC filings

ZD Net

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