Why buy Palm?
In an earlier post, I had discussed the crisis at Palm and the inability of the leadership to acknowledge, identify and address the crisis. So what makes Palm a good purchase for its likely suitors anyways?
Palm has to its credit a few strong assets that make it a very viable and in demand purchase. WebOS, the Palm patents and an ex-Apple talent is what drives interest in Palm. The depth and quality of a patent portfolio is somewhat correlated to the time a company has been in an industry and the extent to which it has held leadership positions, which is presumably when it might have sewn up some key patents. In fact for the WebOS, It is the devices: Pre and Pixi that is constraining the software and the device is a lot easier to fix than a poor operating systems. Just think of how long it took Palm, Apple, Google and now Microsoft to develop their new mobile operating systems; years. That’s where the interest in purchase of the Palm lies.
There are many companies that would be interested in WebOS — some obvious and some not so obvious. Probably the best way to frame the value of WebOS is to think of the size of the overall cell phone market was 1.1 billion units in 2009. If the future of the phone industry is smartphones then over time there are only going to be handful of OS’s that will prevail. WebOS has the technical pedigree to be one of those platforms. Nothing is certain, but for a number of companies it might provide the opportunity, or at least the perception of the opportunity, that they could be one a handful of platforms in this market. Sample this: There was a lot of speculation about Apple suing Palm over rivaling technologies. Yet it could not. The rational was the strength in the Palm patent Portfolio. Apple sued HTC over patent infringements instead. An unintended consequence of this lawsuit is that it potentially increases the value of Palm’s patent portfolio, and strengthens the case for them to be acquired
There is also the App Catalog to consider. With Palm’s recently released PDK they have probably the best gaming development platform after the iPhone, but again for this to get serious traction with developers they need to believe in the viability of the platform, which is unlikely as long as Palm remains independent. The case for the talent is pretty much self evident.
From an acquirer’s perspective, everyone that might be interested in Palm knows they could be very close to needing life support and waiting for the point at which they will need resuscitation could be very costly. They also know that there has got to be more than one other party interested in acquiring Palm so they can’t sit simply bide their time before they make a bid, lest they lose the company to another bidder. (A case in point is Admob on who Apple dawdled for a while only to see it acquired by Google and Apple ultimately had to take a second choice option). Then there is the time to market issue. There are quite a few OS’s in development and Android and the iPhone are leaping ahead; no buyer has the luxury of sitting back to wait and see how things play out if they want to compete.