HP forks out $1.2 billion for struggling Palm - Money well spent?

HP forks out $1.2 billion for struggling Palm - Money well spent?

Summary: Following months of speculation and rumors, HP has announced that it will by struggling smartphone maker Palm for $1.2 billion. Was this money well spent?


Following months of speculation and rumors, HP has announced that it will by struggling smartphone maker Palm for $1.2 billion. Was this money well spent?

Highlights on the press release:

HP and Palm, Inc. (NASDAQ: PALM) today announced that they have entered into a definitive agreement under which HP will purchase Palm, a provider of smartphones powered by the Palm webOS mobile operating system, at a price of $5.70 per share of Palm common stock in cash or an enterprise value of approximately $1.2 billion. The transaction has been approved by the HP and Palm boards of directors.

The combination of HP’s global scale and financial strength with Palm’s unparalleled webOS platform will enhance HP’s ability to participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets. Palm’s unique webOS will allow HP to take advantage of features such as true multitasking and always up-to-date information sharing across applications.

So where's this marriage going to go?

My take is that while Palm has, unsuccessfully, tried to reinvent itself over the past few years with handsets such as the Pre and Pixie, the company hasn't managed to make much of a splash. Partly this is down to Palm being outmaneuvered by competitors such as Apple, HTC, Motorola and Nokia, but the biggest problem that Palm has has been crippled by not having a large enough ad budget or broad enough distribution channel compared to its competitors. This deal with HP should give Palm an enormous leg up.

But what's in it for HP? Well, I can't help but feel that the companies mobile devices line is somewhat stale, and bringing Palm onboard could mean a nice refreshed line of devices.

But is this partnership too little, too late? Apple is firmly entrenched at the leader of the pack when it comes to style, desirability and has a well-established platform and network of developers churning out apps. On top of this, we can expect a new iPhone to appear in June. RIM's Blackberry also has firm roots in the enterprise market. On top of all this, Microsoft is getting ready to launch its Windows Phone 7 Series lineup of handsets, something which users have been hoping to see for a long time. Put all this together and all of a sudden HP/Palm is faced with an enormous mountain to climb.

A couple of years from now and we might have a clue as to whether this was money well spent or over a billion down the drain ...

Topics: Mobility, Hardware, Hewlett-Packard, Smartphones, Wi-Fi

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • Adrian come on. This is so 30 minutes ago. Get Twitter would you! Sheesh

    Go take care of that wasp nest!
    Dietrich T. Schmitz, Your Linux Advocate
  • I think HP has a dud on its hands

    I think HP over paid for a fledgling company with products that are already dead. If anything Palm should have been a fire sale and unfortunately HP has started out way in the red on this. I question their management on this one.
    • Still, what could they be after?

      If it was PalmOS, they could have easilly licensed that for a fraction of the sales cost of the company, and the cash would have helped bolster palm for a while.

      The technology? HP is already experienced with that.

      Their patent portfolio? I'm sure they have a few, and once again licensing it would have cost less.

      Maybe the company as a whole was less then the sum of it's parts?
  • RE: HP forks out $1.2 billion for struggling Palm - Money well spent?

    I have (do to consulting) a iPhone 3gs, a BB Tour, a Palm Pre and a Nexus One. The tour is my primary phone until iPhone makes it to Sprint as International data on AT&T is crazy! I love BB messanger and I love HAVING a keyboard. The PalmPre+ from Version with some work could be the best cell phone if it had the Apps! Based on what I see from RIM they will go next (new OS looks like a bad iPhone......why!) Microsoft has no crediability so it I think we will soon be at 3 Apple, Google and hopefully Palm/HP
  • Short Answer


    Longer answer.
    Big bucks now in mobile computing.
    Bigger bucks in the future.
    Choice: Palm OS or bend over to Steve Balmer.
    $1.2G USD is not a lot of money to HP.
  • RE: HP forks out $1.2 billion for struggling Palm - Money well spent?

    Interested to see how this "might" affect relations with MS - is a departure from the UC&C combined initiative that was announced?
  • Palm webOS may be irrelevant

    I haven't used it, so I'm just guessing that the drawback to Palm's products has been its OS. I doubt the hardware is all that different in any significant way from other phones, and Palm phones apparently do connect to various networks.

    It's the patent portfolio, hardware engineering and design they are after. HP is a hardware company.

    If HP does what the other big players are doing, then all it may take is a couple of lawsuits and HP could have their money back perhaps. Who knows who may have ripped off Palm's designs? They may know, but can't bankroll the litigation due to the behemoths they would face. HP could stand toe to toe with just about any other company.