Dark Horse HP Scoops Up Palm for $1.2 Billion

by Jeff Wiener on April 29, 2010

In a saga that has been more entertaining and engaging than an Agatha Christie murder mystery, it turns out that the company that has swooped in to purchase Palm wasn’t even on the list of the usual suspects, as it was revealed late yesterday that dark horse Hewlett-Packard will scoop up the company for a cool $1.2 billion.

With names like HTC, Dell, and Nokia falling to the wayside in recent weeks, up until yesterday the consensus pick for Palm’s savior fell to Chinese PC manufacturer Lenovo, although as we noted here, there were strong reasons to doubt that veracity of that speculation. While there was a small contingent of analysts who still held out hope Palm to be purchased by Nokia or another big name, HP, strangely enough, wasn’t even on the radar.

At first glance, this move seems to suffer from all the same downsides that plagued all the other potential deals, with HP stuck with a dying brand from a company that is quickly becoming obsolete. But then I thought about the other moves HP has made recently, and suddenly, it all made sense.

Late last year I wrote on HP’s purchase of 3Com, a move that, at the time, seemed to have even more questions and confusion surrounding it then this recent Palm story. Although HP gained control of 3Com’s powerful line of products in the high-end data aggregation switch market, it boggled the mind why they would want them in the first place.

Further, while HP also gained control of 3Com’s struggling VoIP, it didn’t really add up why HP would want access to that kind of tech…until now.

With the purchase of Palm, HP is now in possession of some very powerful technology. They own the switches, the 3Com voice technology, and now they own the mobile device OS as well. In one fell swoop, HP now becomes the only player in the market that owns the entire end-to-end solution, and if they integrate it all correctly, they may be unstoppable.

Although this move won’t immediately place them at the head of the pack in either market, its interesting to note that neither Cisco or Avaya is able to provide this complete package on the enterprise voice side, just as neither Google, Apple, or RIM are able to deliver it on the mobile front.

Regardless of whether HP will hold all these assets close to their chest in an effort to generate the maximum amount of in-house revenue from their burgeoning mobile endeavour, or whether they choose to leverage this tech to other companies that would pay HP to provide a one-stop shop for all their mobile needs, with this lastest acquisition HP has clearly put itself in the drivers seat.

Further, with Palm’s long list of innovative patents, which if managed correctly could be well worth 1.2 billion on their own, their established lineup of phones (which hopefully will get a refreshing update with HP’s input), and Palm’s vaunted webOS (which HP should consider themselves fortunate to get their hands on before Palm began to market it), HP is getting everything they would want to start up their own mobile branch.

Although the first steps for HP will not be to clean house with Palm, as further speculation has CEO Jon Rubinstein staying on board, I would wager that after the merger is finalized this summer you’ll see HP move away from disappointing products like the Palm Pre, to developing phones that will rival the technological advancement and innovative of Android-based devices and the iPhone, finally allowing Rubinstein to do what he was brought into Palm to do in the first place.

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Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

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