Ronnie05's Blog

Palm Buyout (Part I): The synergies between HP and Palm

Posted in Industry updates, Mobile Devices and Company Updates by Manas Ganguly on April 29, 2010

HP seems to be buying a route into the mobile phone market with its purchase of Palm, but it could also plan to emulate Apple’s strategy with tablets and other media devices.

The world’s largest computer maker has now bought a foray into mobile devices with a $1.2 Billion acquisition of the beleaguered Palm. There are many views around what this acquisition means for the new entity of HP and Palm

On one end, the takeover could just involve a change from a Palm that’s struggling in the smartphone business to a Palm with the cash (and the resulting market confidence) to create a successful smartphone business. On the other hand, the acquisition could mean that HP could be more interested in owning its own operating system across phones and mobile devices (and being free of Microsoft in those areas), much like Apple. Web OS certainly holds a promise as far as HP is concerned. Yet another view is that HP needs a strong presence in mobile, but Palm doesn’t deliver that.

This acquisition is of critical importance to both Palm and HP for the synergies that it gets to the table. If HP didn’t have the right products to become a smart phone player, Palm didn’t have the money to compete with Apple and RIM in the US market and to make the brand known outside its home market. This deal takes a good operating system to the right hands and to the next level. HP’s purchase of Palm shows a clear intention to enter the consumer mobile device market. HP brings financial strength and broad reach; Palm brings a set of consumer-focused hardware, OS, application store and intellectual property. HP has made a clear commitment to invest in Palm’s technologies and has hinted at ambitious plans that go beyond smartphones. But neither Palm nor HP have a strong presence in the consumer market. Most significantly, they lack momentum around mobile application stores and a developer ecosystem. It will take time for HP to build up such an ecosystem, and it faces extremely strong competitors like Apple and Android. The consumer smartphone market moves quickly and HP will have to act fast.

In the short-term, the impact of this deal will be felt in the US market and Nokia will be one of the most affected players. When a company has a good product and the money for marketing activities, it creates a problem for its competitors. With money to invest, Palm will be able to leverage its brand, broaden its portfolio, and provide carriers with the money they need to sell devices. Money brings success if you have the right product, as Palm has. Palm’s survival no longer seems to be a problem, for the time being.

It appears that HP intends to use webOS in other device types, much as Apple has extended iPhone OS X to the iPad. However, there are still issues with awareness and applications development, which is paramount to success in the smartphone market. HP will not make Android smartphones and focus solely on webOS devices? This could prove to be a restrictive strategy in the fast growing smartphone market. Distribution is key, as Google recently learned. Traditionally, HP has a very good distribution network that will help channel to market but it will need to work closely with mobile operators, a weakness of Palm’s, in order to succeed

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  1. […] it was hailed by many as a true competitor to the iOS. However WebOS lost its way with Palm and the HP acquisition of its parent. The WebOS, incredible as it was, was thought to be done and dusted with.For HP, acquisition of […]


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