HP's purchase of Palm: Minimal impact on the mobile field (for now)

HP's purchase of Palm: Minimal impact on the mobile field (for now)

Summary: 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. Here's a look at the landscape.

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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 spentWill HP/Palm be the enterprise challenger to RIMHP 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

Bradley said:

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.

Topics: Smartphones, Hardware, Hewlett-Packard, Laptops, Mobility, Tablets

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12 comments
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  • Good analysis

    The part I liked best about the analysis is, Larry kept using the words "long term". Those of us who truly want Palm to make it realize that just a week ago, "long term" might have been the end of the summer! I want to see WebOS (which I believe is far and away the best mobile platform I have seen) on multiple devices, not just the Pre and Pixi. HP will make that happen.
    TimmyB
  • Not minimal .... NONE.

    For some time it would be like nothing happened.

    WebOS may be the reason for the purchase (in that case it was a stupid move .... they could had just purchase a license for 1/1000 of the price), but right now it is only good for a very small screen devices. Do you see any Palm device with a touch screen the size of at least an iPhone? The Palm-Pre is the closest and the screen is not even 2/3 in size. It would be a long time before it is ready to be used on a tablet size device and even then, there is no guarantee it will be successful.

    Another issue, WebOS has (basically) no apps. The iPhone's success is due to the App Store, not the device itself. HP will have to build the WebOS brand up before it can successfully market a tablet based on it.
    wackoae
    • not necessarily...

      webOS is highly scalable and could easily be adapted to tablet form. A dual boot table of win7 for more intensive work and webOS for the quick and easy things...web, media and such would make for a phenom device. Give it a nice dual core atom to really take advantage of webOS's multitasking. Porting it over to an intel base shouldn't be difficult. Dual booting would also take the pressure off of having the tremendous app catalog at the get go.

      With the financial backing of HP, wooing developers to bump up the apps would be a no brainer. The only real reason the app store is growing at a snail's pace is because developers didn't have faith in the OS being a big hit. With Palm's lackluster marketing and just so-so hardware, it was an understandable position. Just look at DataViz with Docs To Go. They got burned on the Foleo and most likely didn't want to put the time and money into getting DTG going on webOS without some financial help from Palm. So that will be a different story with HP's checkbook.

      And screen size, granted I'll be buying an EVO to run along side my Pixi, but I love the Pixi's size and form factor. I don't mind the smaller screen at all because the form factor and convenience wins out.
      crogs
    • NONE

      I agree. Both Palm and RIM will suffer because they're fighting for a shrinking piece of the pie as iPhone and Android gobble up the market. RIM and Palm could have joined forces and become a formidable player a few years ago, but now RIM has their new OS version and HP has WebOS. Put yourself in the shoes of a developer or business - First choice for your app is iPhone, closely followed by Android. After that Palm is a tiny user base, and RIM doesn't really have the app/dev support in place. Does it make sense to spend resources porting to FOUR smartphone OS's? Two for now is already hard enough. Three is a stretch. Four, four-get-about-it!
      chefp
      • Why is like that?

        There is Symbian and which is still larger than all of these four OSes you
        mentioned.
        --Ram--
        Ram U
        • No, Symbian is (IMO) more like PalmOS...

          That's the [u]old[/u] PalmOS 5.x. The distinction is important, and Nokia needs to work through this very carefully. Palm killed itself by failing to provide a way for 3rd party software vendors to transition easily from the Palm OS devices (Treo phones, Tungsten devices, etc.) into WebOS.

          Many of those software vendors charge $100s per year for their products, and many of their products need frequent updates. (For example, medical software, which needs updates to include new drugs and study findings.) Palm left them with no migration path-- in most cases, it's just as easy to rebuild the software for Android, or even WinMo, as it is to migrate "forwards" into WebOS.

          That means: Not easy at all.

          Because "MeeGo", AFAIK, is being defined with very strict architecture layers, it is theoretically easy to replace the stuff at a low layer (e.g., Sybmian on ARM versus the "new", Linux-Foundation-Owned Intel/Nokia Linux on Atom). Or, to migrate to an alternative intermediate-layer toolkit (e.g., replace Hildon/GTK+ graphics toolkit with qt).

          But the devil is in the details - right now, because these stacks were built differently, migration is VERY hard. qt doesn't (yet) contain all of the widgets which Hildon/GTK+ provides - a lot of widgets which KDE desktop developers depend on actually come from KDE. So, when you declare your program to be a qt application, rather than a kde application you lose tons of things you need: scrollbars, menu widgets, etc.

          And you're inclined to jump back to the old Hildon/GTK+ toolkit. Nokia's qt "strategic vision" really can't compete with the "legacy, going away" GTK+ stuff yet... so we're inclined to hang back, using the old stuff.

          MeeGo should end up as one of the Gorillas In the Room, perhaps the very biggest. But Nokia and Intel need to do a vastly better job than Palm did, in supporting the migration of huge numbers of "legacy" Apps into the new platform software environment(s).

          IMO, that's when Palm died. WebOS was gorgeous, but it didn't run the legacy Palm Applications which people needed it to.
          Rick S._z
          • I agree with you

            but still chefp mentioned only 4 OSes as major figthers and Android and
            iPhone are the largest contenders, but Symbian's sales are still larger
            than these 4 combined and Nokia's own Linux implementations.
            --Ram--
            Ram U
  • It does freeze the entire market sector

    While the other MS OEMs seriously rethink their roadmaps.
    Seriously, if this is all true, and nothing makes me believe it's
    not, to have the "standard bearer" for Win 7 tablet faithful
    not just apparently give up the charge, but also bring an
    essentially neutrally unfriendly 3rd-party into the fold is truly
    shocking. I'd [i]love[/i] to have seen Ballmer's reaction to the
    news. It must have been a 10 chair-throw tantrum.
    matthew_maurice
    • I'm kinda with Mathew on this....

      For a really, really long time, HP has been in Bed with Microsoft and Intel. But with MeeGo, Intel shows an intention to compete directly with WinMo V7. (Yeah, I know that MS gave it some stupid new name... I'm still calling it "Windows Mobile".)

      It appears that Nokia will assure that MeeGo supports ARM. (Needed for devices where power consumption is key- even though Intel is almost almost leading by an entire generation in it's chip technology, ARM has vastly fewer transistors than Atom -- and ends up with more chips per wafer anyway.) And Intel's doing it to sell Atoms- and support chips, and maybe dedicated graphics accelerators, too. The full x86 stack is attractive for the netbook/notebook market.

      Hurd has just spent a vast amount of money, and a key part of the value seems to have been WebOS. But WebOS doesn't just compete with [u]one[/u] of HP's long-time strategic partners, it will compete with BOTH OF THEM!

      I have to wonder- maybe the extremely high "value" corresponds to a different part of Palm's portfolio: Patents, rather than copyrighted software?

      Or maybe some license(s) for use of other company's technology, in which the licenses were not terminated "...upon change of control"? And the technology in question (perhaps in imaging, rather than computer "Operating Systems") is enormously valuable to HP?

      I totally don't see $1.2B in value when I look at WebOS: MeeGo will be better, and cost little or nothing to use-- and other huge companies invest THEIR people and management focus in creating it, leaving HP free of the infighting and management hassles which usually come in with such a large acquisition. Mr. Hurd is not stupid, so I think he's really doing this to acquire one or more of Palm's OTHER assets.

      Which ones?
      Rick S._z
      • My guess also is similar to yours

        HP is after the patents of WebOS. Once they have those on hand, they
        might still use them and may still have Windows (Mobile) as their
        platform for devices, and/or may release products in parallel with both
        the OSes (WP7 and WebOS) and see which sells faster go with it in long
        run. My guess is purely speculation and I may be complete wrong too.
        --Ram--
        Ram U
        • did you guys read their investor presentation?

          They went on and on about webOS and how they planned to continue developing it. With the Slate getting scrapped you might even see a webOS tablet before a win7 one. Though a dual boot would be pretty sweet.

          MeeGo? That merger just got finalized. Symbian needs a huge facelift, and when would one see a device for sale? Would the holiday season be close to reality? Two more sales cycles of new phones on Android, WP7 coming out, OS4 iphone and hopefully a new webOS device. I imagine Palm has a design that almost if not already ready to go to take advantage of HP's supplier chain.
          crogs
  • RE: HP's purchase of Palm: Minimal impact on the mobile field (for now)

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