Tech giant H.P. buys Palm for $1.2 billion

Palm logo

For a little while now there has been a lot of talk about which company will end up acquiring Palm, makers of those Personal Digital Assistants (PDA’s) that were so popular before the rise of the smartphone. The two main companies that were being talked about as possible buyers were Taiwan-based smartphone maker HTC and PC maker from China, Lenovo. From what I heard until Wednesday, it looked like Lenovo was the odds on favorite to buy Palm. However, seemingly out of nowhere came in Hewlett-Packard and bought Palm for $1.2 billion. Without any company taking over Palm, analysts say that the company would be doomed to failure.

Palm tried their hand at the smartphone market with the Treo smartphone line and then the Palm Pre but only had minimal success. They were never able to evolve their operating system enough to keep up with the Blackberry’s and iPhone’s of the world. H.P. has also not been a big player in the smartphone market and if you can think of one H.P. smartphone model without searching the name online then you should be proud of yourself. I do recall however, that in the early to mid 2000′s they did have competitive PDA’s and actually competed directly with Palm and Dell in that market and they are currently the world’s largest PC maker.

The fact that H.P. is a very large company and Palm does have experience in building operating systems along with smartphones (even though they weren’t very popular) should make Apple and RIM take notice of what they will come up with. It’s doubtful that they are worried about H.P. being a serious player, but it would be foolish to not respect them given their size. The only way H.P. can really make a big splash would be to make something new and different from what Apple has done with the iPhone.

The fact is that since the iPhone launched, every other company, including RIM has tried to emulate it in some way.

The interesting thing about this announcement is that H.P. said that they plan to enter the smartphone market in a big way now that they are buying Palm. This doesn’t make complete sense as neither of these firms have had any real success in this space before. It is very hard to believe that they can produce a product that can compete with the iPhone and be able to hold its own against it. However, competing with the likes of HTC, Samsung and other smartphone manufacturers is plausible. It depends what level of success they are trying to achieve because aiming to be number one seems unlikely but aiming for the top 5 might be attainable. Their problem is that in the announcement, a VP at H.P. said that “H.P. intends to be a leader in this market.” Well, everyone can dream.