Topic: Software

Love stinks: The worst mergers in the history of the technology industry

Summary: Valentine's Day is here again, and love is in the air. Couples flirting, courting, forming relationships. Sometimes those relationships result in marriage. Marriages occur in the tech world, too. Corporate mergers can result in the two parts being stronger than the whole, or they can end in utter disaster.

By Jason Perlow | February 12, 2013 -- 23:57 GMT (15:57 PST)

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The sad tale of Palm

Palm has such a storied history with its relationships with companies that it acquired and companies that acquired it that it would be not be unreasonable to deem it as the Zha Zha Gabor of the technology industry.

A few years after its founding, Palm Computing was purchased by US Robotics, a company known mostly for producing data communications products.

Under that marriage, starting in 1996, the legendary PalmPilot PDA was sold and manufactured. But that marriage was short-lived, as networking company 3COM bought US Robotics in 1997. Unhappy with the way the company was going, the company's two founders, Donna Dubinsky and Jeff Hawkins, went their own way and formed Handspring, a company that produced PalmPilot clones.

In 2000, Palm was eventually spun off by 3COM into an independent publicly traded company. While this improved the company's finances for a time, by June of 2001 the company had lost over 90 percent of its publicly traded value.

In 2001, Palm also purchased Be Inc., a company that produced high-performance computer workstations that ran on BeOS, which was one of the original contenders to replace Apple's aging Mac OS System 7.

When Apple chose Steve Jobs' NeXT company and their OpenStep OS instead, Be was bought at a fire-sale price of $11 million. While industry followers expected the company to use the OS as the basis for its future products, Palm never did anything with BeOS.

In order to attempt to generate more revenue, In 2003 Palm split itself into two companies, PalmSource (for licensing the Palm OS) and PalmOne for producing the PDA hardware. In 2003, PalmOne also purchased Handspring to bring Dubinsky and Hawkins back into the fold.

You still following this?

Palmsource, the company that was meant to become the software licensor, ended up being purchased by Japanese company ACCESS in 2005, which had the intention of creating a next-generation Linux OS, ALP (ACCESS Linux Platform) for mobile devices that would have Palm emulation capability. This went effectively nowhere.

What ACCESS did do was sell the trademarks for the name 'Palm' back to PalmOne for $30 million in 2005.

Palm continued to flounder for several years until 2009, when the webOS mobile operating system and the Palm Pre smartphone was introduced. While displaying innovative multitasking features and a unique user interface, the Pre was a market failure.

In 2010, Hewlett-Packard acquired Palm for approximately $1.2 billion. The Palm brand was discontinued in favor of HP's branding, and the company began development of new smartphone as well as tablet products that used webOS.

On July 4th, 2011, HP's TouchPad tablet went on sale to an unreceptive public and to extremely unfavorable reviews, many citing the product's sluggishness and numerous software bugs. After 45 days on the market and abysmal sales. Hewlett-Packard made the decision to discontinue the manufacturing of all webOS-based products.

In December of 2011, under the leadership of HP's new CEO, Meg Whitman, the company accounted that WebOS would be released in the near future under an open source license.

The future of any webOS-based products produced by HP or any potential licensee is currently uncertain.

Topics: Software, Enterprise Software, Hardware, Mobile OS, Mobility, Networking, Software Development

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93 comments

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RE: Love stinks: The worst mergers in the history of the technology industry

ZDNet first post bug . . .

CobraA1
12 February, 2012 04:44

Reply Vote
RE: Love stinks: The worst mergers in the history of the technology industry

"The litigation debacle went on for years, chronicled in gory detail on sites such as Groklaw."

Indeed, I think Groklaw pretty much started because of this debacle. Frankly, SCO's biggest blunder was this lawsuit. It's not worth bankrupting the company over a lawsuit.

"The Many Marriages of Palm"

Yeah, who knows what Palm was doing in its last years. Before it finally merged with HP, it went from a great company to one that released new products once in a blue moon.

Thankfully, by the time they went under smartphones became popular, and I moved myself to my iPod touch, and later iPhone. Today's smart phones have all of the PIM features the old Palm devices had.

And alas, HP was unable to save the already floundering Palm.

"Oracle & Sun"

Guess we'll find out. I was never so much interested in Sun's hardware as their software, and Java is still being actively developed.

"Total subscribers of AOL went from an estimated 30 million at the height of its popularity to less than just over 5 million in 2007, with no significant quarterly growth since 2002."

Dunno if that was the result of the merger so much as it was the result of broadband and the internet. AOL was a walled garden stuck in dialup.

"Hewlett Packard & Compaq & Digital Equipment Corporation"

Compaqs, oh I remember those - BSOD city. They crashed all the time.

"Nortel & Bay"

"After numerous efforts to restructure the company and financial mismanagement scandals over a period of about ten years, the company filed for Chapter 11 in January of 2009, and its various businesses were eventually liquidated."

And one of my relatives lost his job :(. He worked for Nortel.

CobraA1
12 February, 2012 04:44

Reply Vote
- Bad Mergers....Nortel and Bay...
  
  Yeah, I worked for Nortel for 12 years......I think the problem there was too much focus on Marketing and not enough on engineering..........there was a time when they had no sales and marketing but after all the smart designers and engineers left adding more sales and marketing people was a giant mistake.....you can't market what you don't have.
  
  That and the whole company was run by bean counters and clerks.
  
  It had its moment in the sun as a much welcomed alternative to the AT&T / Pac Bell monopoly but then crashed and burned with the loss of outstanding engineering and design people.
  
  Gary Amstutz
  14 February, 2013 20:18
  
  Reply Vote
- Re: AOL was a walled garden stuck in dialup.
  
  The completely peculiar and inexplicable thing was, while every other ISP adopted PPP as the standard dialup protocol, allowing any off-the-shelf OS to connect without custom software, AOL insisted on its own special proprietary client. While this didn't seem to put off customers in dialup days, maybe the fact that AOL allowed itself to be left behind by the move to broadband was simply because it could not create an equally proprietary broadband connection client.
  
  ldo17
  14 February, 2013 23:01
  
  Reply Vote
- Proliant vs Netserver
  
  Give me a Compaq any day over an HP. That is why they rebranded the compaq stuff and got rid of most of the HP line
  
  Turd Furgeson
  15 February, 2013 13:32
  
  Reply Vote
I would agree with your assesment on many of mergers you have mentioned

except for the KIN.

[i]But the negative experience with the Kin still taints its reputation not only with consumers but also with critical wireless carriers such as Verizon, who as of yet has refused to commit to selling more than one model of Windows Phone or an LTE version which puts it on par with its arsenal of Android devices[/i]

The vast majority of consumers have never heard of the KIN, so how can one have negative opinion of something that they have no knowledge of?

As for Verizon, there are issues on many levels, one is theirs, and Google's heavy investment into Android, as an early counter to the iPhone, something they passed on, so one can argue they do not make the best decisions when given the chance.

I feel the lack of a push on Verizon's end in reference to WP7 is an effort to "not upset the boat" in relations to Google at the moment.

Tim Cook
12 February, 2012 09:30

Reply 1 Vote
- RE: Love stinks: The worst mergers in the history of the technology industry
 
 @Mister Spock The problem is that Verizon mandated data plan on what is essentially NOT a smartphone. KIN would have done well to compete with feature phones.
 
 illegaloperation
 14 February, 2012 09:03
 
 Reply 1 Vote
- Peoples' memories are only as long as their current contract
 
 Are tech people already measuring their lives in numbers of mobile phone contracts?
 
 Patanjali
 25 May, 2012 05:07
 
 Reply Vote
Is this the rational behind spending billions on dated technology?

You mention companies like Novel and Borland or their assets being acquired by other companies - spending huge dollar amounts to do so.

Is it because of patent portfolios that acquiring companies purchase these outdated technologies or businesses?

kenosha77a
12 February, 2012 10:24

Reply Vote
- RE: Love stinks: The worst mergers in the history of the technology industry
  
  @kenosha77a Patents and legacy maintenance business.
  
  jperlow
  12 February, 2012 13:06
  
  Reply Vote
RE: Love stinks: The worst mergers in the history of the technology industry

My(Murdock)Space a perfect example of how not to do it. Take a new technology, totally misunderstand what it is about, destroy the customer base by enforcing change without analyzing the likely effects, etc., etc. One for the classroom of Business 101.

Agnostic_OS
12 February, 2012 12:30

Reply Vote
- RE: Love stinks: The worst mergers in the history of the technology industry
 
 @Agnostic_OS
 
 Well of course, Mr Murdoch was not used to "customers" creating their "own news". His model was that his empire created it, and the "customers" consumed it. Duh. Bad move Murdoch. Perhaps he should have got the company to bribe the police a bit more... Oh wait, that wouldn't have worked on MySpace either.
 
 Bozzer
 12 February, 2012 13:59
 
 Reply 1 Vote
- MySpace was already on its way out...
 
 when Murdock purchased it, which is what made that purchase even weirder. Prodigy, Geocities, Myspace, and now Facebook... That's the progression so far. Facebook's replacement is next, just hard to say what it is, or what it will be...
 
 admiraljkb
 28 June, 2012 05:52
 
 Reply Vote
 - Replacing Facebook?...
 
 riiiight. Keep us posted on how that goes ;)
 
 Robert Fishwick
 13 February, 2013 18:40
 
 Reply Vote
Too early to pass judgment on Oracle's acquisition of Sun

It's far too early to say whether Oracle's acquisition of Sun was good or bad. If the alternative for Sun was insolvency, then Sun shareholders probably came out ahead. The same may be true of Sun employees, not all of whom were laid off. Of course, we'll never know for certain what would have happened to Sun if Oracle hadn't acquired it. From the Oracle side, if the Java litigation is successful, Sun will have turned out to be rather a bargain for Oracle shareholders, no matter how badly the hardware business does. It will also serve as a warning to other firms that trying to use someone else's IP without paying for it can actually cost more in the long run than than paying for it up front. This is good for Oracle, the IT sector generally and all industries that rely on IP protection. It will be bad for Google, of course, but it was Google management's choice to gamble on not paying Sun for the Java IP Google allegedly used anyway.

WilErz
13 February, 2012 04:51

Reply Vote
- ummm, the Java code used was Open Sourced anyway.
 
 No money to be made, just a license. Oracle's suing mainly over the terms of a free license not being observed, and Oracle LOST on almost all counts. The Judge on the lawsuit, has written extensively on the decision mainly in Google's favor that almost precludes appeal, unless Oracle is nuts.
 
 Sun would have been better off being acquired by IBM, which uses Java extensively in its projects, is a large Open Source company, as well as having the Symphony fork of OpenOffice. Essentially, IBM makes serious money on Java, while Sun didn't comprehend how to do that.
 
 admiraljkb
 28 June, 2012 06:00
 
 Reply 1 Vote
 - No it would not have been.
 
 As an employee of Sun at the time, I can tell you that Oracle did not swoop in and out bid IBM, the deal with IBM had already fallen through. And the general attitude of the employees was that we were thankful that it did. The overlap in product lines between Sun and IBM was nearly 100%. The only thing we knew they wanted was Java, everything else was subject to immediate cancellation. Oracle, on the other hand had very little overlap with Sun. We knew they wanted Java as well, but there was very little that we could be sure would be cancelled.
 
 As far as how it all worked out, it is indeed too soon to tell. Much was canceled because it either didn't make money or didn't fit the Oracle corporate strategy. Other areas declined because they were destined to decline and Oracle couldn't stop it just as Sun had been unable to. But many areas have flourished and are on the rise.
 
 blu_z
 14 February, 2013 16:35
 
 Reply Vote
"Sun has become anything but an honest woman under Oracle's stewardship."

What the hell does this mean?

happyharry_z
13 February, 2012 07:00

Reply Vote
- This is what the hell it means
  
  It means Oracle has done a poor job of using Sun's assets to build value for its stakeholders. As Sun was on the decline, any company that would acquire it would be considered successful in stewardship of integrating the company only if Sun-derived business improved. It has not.
  
  theNewDanger
  17 May, 2012 07:33
  
  Reply 1 Vote
RE: Love stinks: The worst mergers in the history of the technology industry

Don't forget tech services businesses. The biggest fail? Whittman-Hart + USWeb/CKS = 10,000 employee $1B revenue services company in early 2000's. Life span? One year.

dannomein
13 February, 2012 09:34

Reply Vote