Did HP save Palm with acquisition? Or did it save itself?

Did HP save Palm with acquisition? Or did it save itself?

Summary: HP saves the day for Palm, but don't forget about the benefits for HP, as well.

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At first glance, HP looks like a savior for coming in and saving Palm from its inevitable demise.

After all, it's no secret that Palm has been struggling to gain traction despite the standing ovation it received at the unveiling of WebOS and the Palm Pre at CES 2009. But the world of mobile has gone through quite a bit of change in that time - iPhone became an even hotter seller; Android hit the scene hard with a lineup of devices and carrier partners; Microsoft's Windows Mobile 7, as well as Research in Motion's Blackberry 6, are just about ready for prime time. And, globally, devices with a new Symbian smartphone OS are expected before year's end.

OK, so Palm needed HP. But what about HP? What did it need?

Also see: iPhone growth magnifies global smartphone potential

Obviously, it needed a smartphone strategy. The company, which has largely relied on Microsoft to power its devices in the past, was pretty much a non-player in the smartphone game. How much longer was HP going to be able to hold out as a smartphone player, given the growth potential there? Sure, as an innovator, HP could have gone back into the labs and started working on the hardware - and maybe even a mobile OS that it could shape and mold - to get in the game. But how long would that have taken?

And then there's the tablet/netbook game. A mobile OS - tweaked from one that powers smartphones to one that powers tablet PCs - was something else that HP needed if it was going to break away from the delays and licensing restrictions imposed by Microsoft.

In essence, that's what it got - hardware, software, engineering talent and carrier partners, among other things - with the $1.2 billion it's dropping to get Palm.

Sure, there are naysayers who will argue that HP paid too much for a company that was in over its head and desperately in need of a buyer. Forrester Research Mobile analyst Charles Golvin, for example, said that HP was right to jump into the mobile game - but was wrong to do so by acquiring Palm. He said:

Palm could be valued for its brand, its intellectual property, its platform, or its people. HP doesn’t need the Palm brand; the IP helps an existing player not a new entrant; we don’t think the WebOS platform is viable long term in the face of its competition; and HP could sweep up Palm’s people individually at a much lower price. HP needs a strong presence in mobile, but Palm doesn’t deliver that.

Maybe there's something in Silicon Valley's water that makes me see things in another light, from the glass half-full perspective. There's a can-do spirit within Silicon Valley that isn't always apparent to those who aren't actually here. Palm is a company that's been sold, revived, split in half and brought back together against all odds. HP has gone through its share of internal turmoil, as well, but has maintained its brand equity through it.

Maybe it's not just the spirit but also the competitive drive - and possibly some personal vendetta - that makes these two Silicon Valley brand names want to go after and beat one of the other iconic names in these parts: Apple.

In a blog post that examines the HP-Palm deal, analyst Rob Enderle notes how hard feelings and memories of being scorned has created a common "Beat Apple" mentality. He writes:

Both companies have a deep desire to beat Apple, because Apple has consistently made fools of both firms. This creates a common goal that should keep the resulting combined company focused. And HP doesn’t require the massive gross margins that Apple needs to survive given the firm and potential pricing advantage as well. If HP can engage Apple in a price war the same way it did with Dell, Apple would be at a severe disadvantage. But first they need a truly competitive product.

Beating Apple will not be easy - Apple has a huge headstart and great momentum. Done right, though, HP could become a mobile contender almost overnight. Enderle continues:

HP has tablet and smartphone display technology in-house that I spoke of previously, an eBook reader, and a set of media management tools that are potentially unmatched in the market out of their lab. Along with the Palm IP, these tools could give them an incredible advantage, if they can execute. That “if” has proven to be a formidable barrier for anyone, including HP and Palm, when it comes to competing with Apple.

To hear HP executives talk about the acquisition, there's definitely optimism in the air. With some emphasis in his voice, HP VP Todd Bradley said on a conference call yesterday that the company plans to "invest heavily" in the development of the mobile business and will "go aggressively" to market. The company expects to see "solid growth," as well, he said.

Topics: Banking, Enterprise Software, Hewlett-Packard, Mobility

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77 comments
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  • Great OS for tablets

    HP clearly recognizes that a heavy Windows desktop OS on tablets will not cut it.

    Tablet devices, as demonstrated by Apple's iPad, need to be:
    - simple & intuitive
    - touch-optimized
    - low/no maintenance
    - instant/always on
    - very responsive
    - low cost
    - resource optimized (CPU, memory, battery, ...)

    Aside from a great UI, local applications for WebOS are even developed using web programming technologies (HTML5, JavaScript, CSS, ...). This makes it relatively straight forward for developers to build WebOS applications that are:
    1. entirely local
    2. partially local, partially web
    3. entirely web

    I'm an Android fan, but I can definitely appreciate WebOS's potential. Hopefully, it will get more traction, with HP behind it.
    linuser
    • Well, it did take HP quite a bit of time to realize that Win7 on tablets

      would be a disaster. And, they still have not
      yet cancelled the Win7 tablet in the pipeline.

      The question is, how soon can HP get a sexy Arm
      based tablet out the door? The Palm engineers
      will have the OS ready faster than the hardware.
      DonnieBoy
      • Why?

        Pray tell, why is Win7 on a tablet a disaster? Personally, it's what I've been waiting for - a tablet that can run Photoshop. But I'm in the minority, so let's ignore that for a minute.

        Further down the thread, you comment that WinMo is dead. In it's pure, unadulterated form, WinMo 6.5 is okay-at-best, and I can understand why it didn't take off. WinMo of yesteryear is even worse...ugh...toothpick-sized close buttons...was ANY normal person given one of these to play with?

        That said, have you tried a WinMo phone with SPB MobileShell or HTC's SenseUI? I've only used SenseUI myself, and I'll admit that it doesn't have the same pick-up-and-play feel to it that the iPhone does, but it takes all of 10 minutes to figure out how to use TouchFLO 3D, if that. The calendar is really nice, dare I say nicer than that of the iPhone. I love the Facebook integration and MyPhone backup service, and that's just the out of the box stuff.

        The point I'm making isn't to be a shill for MS (though I know that I'll inevitably be read as such), but that if HP can put a solid alternate shell on top of Win7 and run that, it COULD work. Using Windows as a base layer makes lots of other things possible, like a USB stack and compatibility with basically anything I plug into it. Would native Win7 work on a tablet? It probably wouldn't generate the mass market appeal that HP is gunning for with the slate. Would it work as a baseline as to not have to reinvent the wheel? I think it could.

        finally, who's to say that they can't coexist? Apple can keep the iPad in the consumer market, but slap a barcode reader on the back of the Slate. Get a few inventory management and medical software vendors on board with apps to leverage the larger screen, throw in an AS/400 emulator, and market the heck out of it to every warehouse and hospital that's currently using Windows Mobile devices, and watch the stock price go through the roof.

        Joey
        voyager529
        • The point is momentum. Shipping versions of Win Mobile, are dead or dying.

          Those will be replaced by Windows Phone 7,
          which will be a day late and dollar short, and
          have almost no applications.

          Meanwhile, iPhone and Android phone growth is
          exploding, so that MS will have a very hard
          time convincing handset manufactures and
          carriers to pay royalties on Windows Phone 7
          instead of just going with tried and true
          Android, which has many more applications.

          And, MS has yet to even announce that they will
          make Windows Phone 7 for tablets. Windows Phone
          7 based tablets are probably a year and a half
          away (if ever), and by then, iPad and Android
          tablets will be entrenched.

          Windows 7 on tablets is a joke. Who besides HP
          is even planning on one? Will HP cancel the
          Windows 7 tablet now that they have WebOS?

          Microsoft is toast in mobile.
          DonnieBoy
          • Time will tell...and we now have it recorded...

            though hearing you say it's toast is usually a good sign that it's not.
            ItsTheBottomLine
          • It is not looking like time will be very kind to Microsoft in the mobile

            space. They are a day late and a dollar short,
            meanwhile, their competitors getting all the
            headlines, and only laughter for Microsoft
            mobile operating systems.
            DonnieBoy
        • Why is Win7 on a tablet a disaster?

          Because they can't get it 'thin' enough to stop killing battery life! And don't get me wrong here! I have AND LOVE Win7 on my PC's and laptop! I'll take it any day over Apple or Linux's current offerings! But on a tablet, battery life and speed of application load times are key! WebOS can beat the pants off of Apple AND Windows on a tablet RIGHT NOW! All HP needs to do is shove their vast resources at it to take the OS into the next level territory! And a Slate with a camera and a 'pop-out' stand could make it a perfect webcam and video conferencing tool!
          HP needs to hit the ground running with this acquisition FAST! You guys are right in that the longer Apple is the ONLY one to market with a tablet, the harder it becomes to play catch up!
          barefoot1976
          • history of tablets since 1888

            the comment that Apple is the only tablet provider is wrong.
            http://en.wikipedia.org/wiki/Tablet_PC

            The first US patent on capturing pen strokes was in 1888
            mswift@...
        • Because...

          As the OP said: Win7 doesn't meet the following
          list of tablet requirements:

          - simple & intuitive
          - touch-optimized
          - low/no maintenance
          - instant/always on
          - very responsive
          - low cost
          - resource optimized (CPU, memory, battery,
          ...)

          And you aren't in the minority by wanting
          Photoshop on a tablet - you are in the margin
          of error.
          hawks5999
          • Yeah, Really!!

            I've been using Photoshop from the days that it had to buy out Aldus to get their Photostyler, and the mere thoughts of porting Photoshop to a tablet? Unh....Ain't gonna happen! (or at least anytime soon this century!) ;)
            barefoot1976
        • Prediction: Slate good for healthcare

          Joey

          Very good point about the Slate for the healthcare arena. Hospitals are currently struggling to find the right device for Point of care data entry. Currently they have 2 options. Motion Computing C5. crap! and Panasonic H1 outrageously priced. Slap on a barcode reader for BCMA and hot swap batteries for nurses and life is good. The Slate and Healtcare good fit if priced under $500.
          Clinical_IT
          • I agree...

            Around here they still carry around the old Fujitsu tablet swivel PC's that run on 'gulp' Windows 2000! I'm not sure what program they use on it, but my cardiologist friend (who is also an electronics buff) says they are constantly having trouble with it! I asked why didn't they upgrade to at least XP if not Windows 7, and He tells me that the software won't run on anything BUT 2000!

            My Thought is if HP could get the vendor to redeploy for a Win7 OR a WebOS tablet (which my friend says they don't want to do) BOOM!! Sales to every medical facility in the country and maybe more! I know for a fact that the in home health care nurses and every facility that uses this Fujitsu tablet I've ever met, hates their current system! I think this vendor is lazy! Not wanting to rewrite software for a modern system is hurting your clients because they are trying to keep old; abused; and dilapidated equipment going BECAUSE OF YOU!
            barefoot1976
          • Hmm.. It'll ONLY run on Windows 2000...?

            I kinda find that hard to believe. That may be some FUD he was sold along with the PC..

            Truth is, unless the app checks the OS version every time it's run, it shouldn't care what it's running on. Anyone who programs that kind of check into their app is a greedy bastard.

            Odds are, if there isn't a version check, it can run under Win XP or Vista or even Win 7. It might require a compatability setting.
            Wolfie2K3
          • Only 2k

            I don't know this persons case, but I can
            comment on this since I know how large
            enterprises and healthcare work. What most
            likely is happening is the device is only
            'SUPPORTED' on windows 2000. Most likely the
            application could work on xp (there could be compatibility issues with vista or win 7 so I
            won't comment on that). Unfortunately, being
            in critical care, you typically need to use
            software in the method and platform it created.
            Otherwise, is something happens (a patient
            dies, for instance) because of an inaccuracy in
            the software, the legal department for that
            software can claim that it wasn't used
            properly. Vendors also will not support
            technical issues on platforms they do not
            support. It may be all FUD, but thats the way
            it is.
            ngtwolf
          • Well I would assume that

            you understand that the program was tried and wouldn't run correctly on an XP unit, and as another poster said, the vendor won't support it with anything else. Remember the Doc not only works on hearts, he is a computer buff.
            And on a side note: I have games that won't run in XP but will Windows 98! Compatibility mode doesn't work; different video configurations don't work and the vendor couldn't get them to work! (They didn't expect someone to try, as they were for Win-95!) ;)
            barefoot1976
          • Slate/Motion Computing/H1

            The problem with the new tablets and non
            healthcare tablets and the reason they still
            use crappy Panasonic or Motion Computing style
            tablets is that its the form factor you need.
            I'd love to see something like the ipad tablet
            in healthcare if they solved two things. 1, it
            does need stylus support. You shouldn't -need-
            or even be required to use a stylus, but it
            does need to be on the device for signatures or
            notetaking. Also, while I hate resistive touch
            screens, at the moment that is the only
            technology for touch that works with gloves.
            To test, put a latex glove on and try to
            control your iphone or ipad. :)
            ngtwolf
        • I agree Win 7 is fine for tablets

          I agree with your comment
          about Windows 7 being fine
          for tablets. I have a Win 7
          tablet, a Win 7 convertible,
          and have owned Vista, and XP
          tablets / convertibles as
          well. I enjoy, and want
          desktop Windows on a tablet.
          For my needs, the mobile OS
          on a tablet is too
          restricted. (The key in
          that sentence is "my
          needs", I realize all our
          needs are different.) The
          first thing I do with any
          tablet is increase the size
          of the UI elements using the
          standard Windows screen
          option feature to a finger
          friendly size for me. I now
          have a tablet / convertible
          with the same interface as
          my desktop machine, and most
          importantly, can run the
          same desktop apps without
          worrying about file
          conversions etc. The
          convertible manufacturer
          added a UI layer with huge
          icons like you indicated. I
          prefer the standard
          interface with the larger UI
          elements over the custom UI,
          but also realize many would
          prefer the custom UI added
          by the tablet manufacturer.

          With the new Flash beta,
          Flash is fine on both
          machines, and Silverlight
          plays fine as well. I
          realize we all have
          different needs, but for me,
          a desktop class OS is what I
          want on a tablet. If you
          want less, Android tablets,
          or the iPad fit the bill.

          When I increase the size of
          the UI elements, the scroll
          bar is wider, and finger
          friendly. I realize flick /
          kinetic scrolling is trendy
          today, but that gets old for
          me after about two flicks on
          the same page. I prefer
          scroll bar navigation
          because it is quicker, more
          accurate, and more efficient
          than the flick scrolling.
          Using the standard scrollbar
          navigation of a quick tap
          below the scroll thumb, I
          quickly advance one page.
          Before you dismiss my
          comment, try widening your
          scroll bar, and using
          standard scroll bar
          navigation.

          I have a different opinion
          with WinMo. I am a huge
          WinMo fan because before 7,
          WinMo was the mobile OS that
          met my needs best. The
          small close box etc. were
          designed for stylus input,
          and are a fine size for
          that. When WinMo was
          prevalent on PDA's, VGA 4"
          screens were common, and I
          rarely used a stylus with
          those devices even with the
          standard WinMo interface.
          When SmartPhones became
          popular, the screen sizes
          dropped, and the UI elements
          became even smaller, but
          again were designed for
          stylus input. Fortunately,
          there have always been
          skins, and other UI tweaks
          available for those that
          wanted a more finger
          friendly interface. My
          smartphone has TouchFlo 3D,
          and I like it, but on my
          older VGA PDAs which I still
          use, I keep the standard
          WinMo interface customized
          with Pocket Plus. Although
          I have tried Mobile Shell,
          and it is nice, I usually
          end up back with the
          standard interface
          customized to my liking with
          Pocket Plus. It works best
          for me, and is finger-
          friendly on the 4" screen
          devices. I am not as stylus
          hostile as some other users.
          I realize others like the
          more flashy, animated,
          finger friendly interfaces,
          and I certainly respect
          that. One of the things I
          liked about the pre-7 WinMo
          was you could customize
          WinMo to your liking. If
          you did not like the
          standard interface, there
          are many UI skins, and
          utility options to change it
          to your preference.

          I don't like the new
          controls being instituted
          with WinMo 7. The things I
          like about the OS are being
          eliminated, or severly
          hindered. Since MS
          abandoned the power users, I
          may be abandoning Windows
          Mobile for Android.
          gadgetlover
          • Fine as long as you do not care about battery life, heat generation, weight

            thickness, etc.
            DonnieBoy
          • Uhh...You have a Windows 7 Tablet? Who's?

            Or did you take and load a 'standard' version of Windows 7 on an old tablet? All of the Win7 tablets aren't scheduled for release until starting in June!
            You (and not saying you are wrong here) are in the minority here, when it comes to Windows Mobile and the new OS's! But I agree, to each his own! I am over 60 yrs old and with my eyesight getting weaker every year, I still can read email on my Pre, because I can stretch the text out to readable size!
            A Modern Tablet running a full version of Windows 7, would have to have a lot of power! A LOT! To get such a device would be at a cost that would rival gaming laptops! Not practical for the masses! The ideal would be a tablet that has a sleek OS that is fast, yet takes little resources to run, and has a decent price. WebOS fits the bill! And if some vendors get the urge to port their existing software to it? Next-level stuff! It wouldn't take much for Firefox to be ported, as well as Thunderbird. Adobe reader already there! Open Office could be!
            Look for HP to use their vast relationships to that end!
            barefoot1976
          • Already have a Win 7 tablet, and a Win 7 Convertible

            I purchased the Archos 9
            tablet which was released
            before the iPad was even
            announced if my memory
            serves me right, and it runs
            Windows 7 Starter. I also
            have an ASUS T91MT which
            runs Windows 7 Home Premium,
            and I purchased this
            convertible before the iPad
            was released. In both
            cases, the experience has
            been much better than the
            reviews on the tech sites,
            and cost about the same
            as the low end iPad yet do
            so much more of the
            functions I want a tablet to
            do. Again, the important
            words are "functions I
            want a tablet to do".

            Some tech site
            reviews diss the
            small UI elements, and
            flick scrolling response
            with the Win 7 tablets.
            They do not mention
            that every version of
            Windows I can remember has a
            built-in setting to change
            the UI elements to a
            comfortable size for your
            finger size, and scroll bar
            navigation gives you an
            accurate page down with a
            single
            light tap on the larger
            scroll bar vs. the flashier,
            yet less accurate flick
            scrolling they salivate
            over.

            With the latest graphic
            drivers, and Flash 10.1,
            Flash plays ok on both
            devices although I would not
            call them a Flash workhorse.

            I am in my 60's as well, and
            a large font for comfortable
            reading is important for me
            as well. The browsers, and
            other apps. have a text size
            setting so I always can read
            the web, and local documents
            with a comfortable reading
            font with proper text flow.
            Based on testing single
            column webpages on the iPad
            at
            BB, the iPad has similar
            problems to the iPhone in
            displaying some single
            column pages with a font
            size large enough to read
            without horizontal
            scrolling, or using a
            bookmarklet for each page.
            The font may be slightly
            larger than the same page on
            the iPhone due to the larger
            screen, but it still
            displays with too small a
            font size for comfortable
            reading even after a double
            tap zoom. Yes, you can
            always pinch zoom, but that
            does not reflow text, and
            you have to horizontally
            scroll to read each line, or
            invoke a bookmarklet.

            Battery life is not an
            important factor for me
            since the only devices I
            carry with me daily are
            under a pound as I get
            older. I use my tablets in
            the house, or in a hotel
            when traveling. For longer
            sessions, I will be using a
            larger screen desktop, or
            laptop. I don't want to lug
            an iPad, or netbook, or
            laptop around due to their
            bulk and / or weight. For
            the younger reading this
            post, you'll know what I
            mean when you get older.

            So for about the same price
            as a low end iPad, I have a
            machine that does the tasks
            I want to do better than
            smartphones / iPad /
            Android, has an
            interface that mimics my
            desktop, and with the
            increased UI element sizes,
            is as finger friendly as the
            iPad, or latest smartphone.
            I can use my favorite
            desktops apps, and the
            browser isn't blocked by
            Hulu.

            As I stated in my original
            post, I understand, and
            respect that other users'
            needs are different, and
            they
            might prefer a lighter OS
            for the functions they wish
            to accomplish with a tablet
            device.
            Fine for them if a lighter
            OS meets their needs better
            than a desktop, but for me,
            the desktop OS is best.
            gadgetlover