Hewlett-Packard, the world’s number one PC manufacturer, has announced the purchase of cashflow poor but IP rich mobile phone manufacturer Palm for US $1.2 billion.
The announcement of Palm’s purchase came just after the U.S. stock market closed yesterday, and came as a shock to analysts who were predicting that PC manufacturer Lenovo or 5th largest mobile phone manufacturer HTC were the most likely suitors for Palm.
Palm last year released a new mobile operating system, WebOS that runs on the company’s Pre and Pixi phone models. However the company has struggled to0 gain momentum for their devices amid tough competition from Apple’s iPhone and Google’s Android handset family, this has resulted in their cash flow dry up, forcing Palm to sell.
Hewlett-Packard, once dominant with their iPaq PDA/mobile phone line after acquiring Compaq in 2002 has failed to maintain their once strong hold on the smartphone market. HP’s declining smartphone market share lead them to Palm, offering HP a chance to decouple from Microsoft’s Windows Mobile operating system by taking Palms’ WebOS in house.
The rescue of Palm by HP does much to breathe life into the ailing company “The focus now goes from financials to what the devices can actually do,” said Chris Hazelton, an analyst at the 451 Group to PCworld.
Palm has found themselves struggling to find scale in order to promote more than two mobile handsets, which has seen the company crowded out of the marketplace by manufacturers using Google’s Android Operating system. Palm offers HP a considerable back catalog of Intellectual Property which would have made the purchase that much more attractive to HP.
HP however intends on addressing the limited appeal of Palm only having two handsets presents by “doubling down” on WebOS efforts, giving rise to rumours that the WebOS operating system might make its way to a variant of the HP Slate tablet computer in much the same way Google’s Android is being deployed by tablet manufacturers.
Brian Humphries, HP’s Senior Vice President of Strategy and Corporate Development, commented to Techcrunch on the Palm acquisition.
“This is a great opportunity to take two Silicon Valley idols and put them together,”
“WebOS is the best-in-class mobile operating system. Our intent is to double down on webOS,” Humphries said.