Hewlett-Packard's surprise purchase of Palm won't rattle the smartphone or mobile field in the near future, but over time the acquisition could spark a few ripple effects.
As I pondered the field of players, it became clear that HP and Palm aren't much of a threat to anyone right now. HP hasn't focused much on the smartphone market and Palm is a wounded business in need of repair. It could take a minimum of 12 months---an absolute eternity in the mobile market---to get Palm ready for battle again, deliver new devices and grab shelf space at retailers and carriers.
However, the long-term dynamics with Palm as part of HP could get interesting. If nothing else, HP may have managed to alter its relationships with key partners like Microsoft. Of course, this is nothing new for HP as it fights multiple battles against IBM in services, Dell and IBM in servers, Oracle in the data center and Cisco in networking. Now you can toss in a bevy of smartphone players to the list of HP foes.
More: Did HP save Palm with acquisition? Or did it save itself? HP makes its mobile move; Saves Palm from collapse; Will developers stick? HP forks out $1.2 billion for struggling Palm - Money well spent? Will HP/Palm be the enterprise challenger to RIM? HP Slate with webOS: The potential iPad rival from HP's acquisition of Palm
HP wants to own the entire PC stack all from the data center to your PC and printer to your phone.
Here's a look at how the HP acquisition of Palm may impact the competitive landscape in the mobile market:
Apple: HP's acquisition of Palm is likely to create a more formidable foe for Apple. After all, both HP and Palm have spent a lot of years trying to crack the Apple code---to no avail. If anything, a stronger HP-Palm could bring more developers to the WebOS. Real competition for Apple is far off---unless the WebOS turns out to be a great platform for tablets that can rival the iPad. Threat: Minimal. The Android gang (Motorola and HTC): With HP there's little doubt that Palm should be able to procure parts cheaply and crank out more smartphone designs. HP has a real manufacturing engine and ties to a big supply chain. If anything, Palm should be able to crank out more devices. Add it up and you have shelf-space competition for the Android device crew for smartphones and tablets. Threat: Medium.
Microsoft Windows Mobile/Phone 7: HP executives noted that Microsoft remains a key partner. While roadmaps are far from being baked, HP indicated Microsoft is still a partner. Todd Bradley, executive vice president for HP said:
I actually anticipate that there will be a lot of media consumption devices, which are able to be used in Home and create a whole Home ecosystem. I actually see this convergence as being very, very important. Very, very important. We are very engaged with this marketplace. We think that tablet is one form factor, but there are number of other form factors and other solutions that people are engaged in. We are engaged with this development very intimately, and we will announce whatever we need to announce at the appropriate time.
However, the fact remains that HP owns an OS now. If HP uses the WebOS to power tablets it will be at the expense of Windows. HP didn't buy Palm to create a MotoBlur-ish overlay. Microsoft chief Steve Ballmer and HP CEO Mark Hurd in January said they would cooperate on all aspects of the enterprise business. Will that carry over to the mobile playing field? Threat: Minimal short term, but potentially high over time. Research in Motion: While HP executives talked mostly about connected entertainment devices and a mobile experience, it's hard to believe that the IT giant isn't going to make a significant enterprise play. All of these smartphone players are killing themselves to land low-margin consumers while the enterprise remains almost the exclusive domain of Research in Motion. HP with its channel and IT portfolio should be able to make a run at the enterprise. Related: For the enterprise, BlackBerry is still making all the right moves
While Palm currently has the Pre and Pixi smartphones, we see that as one space that right now is very consumer-oriented, and we will look at how we leverage our both retail and commercial channels to broaden the distribution of that -- those set of products. I think the tablet/slate products are such new markets, we see opportunities broadly for consumers, but at the same time, having just finished up our partner conference, enormous interest on behalf of channel partners with specific vertical deployments in things like healthcare and education. So I think you will see these products deployed in both markets or both segments, consumer and commercial, and again, we will talk about timelines when we get closer to a completion.
If Palm's intellectual property is expanded to broader mobility---tablets, verticals and industry focused apps---will RIM be able to follow? Threat: Minimal short-term, but high going forward as HP moves to attach its mobile devices to its broader IT stack.