HP To Acquire Palm

Hewlett-Packard Co. said today it has agreed to acquire Palm Inc., credited with creating the smart-phone, for $1.2 billion.

Palm earlier this month said it was putting itself up for sale after its new webOS platform failed to gain the traction the company and its investors, Elevation Partners, had hoped. By acquiring Palm, HP fills a key hole in its own product portfolio.

HP said it is acquiring Palm for its webOS platform, pointing to its support for application multi-tasking, tight device integration with support for gesture-based touch, mobile cloud-based services and its development platform, which is suited to Web developers. HP also pointed to Palm's intellectual property portfolio of 1,650 patents and its bench of engineering talent.

Describing it as a "transformational" deal for HP, Todd Bradley, executive vice president of HP's personal systems group said the company intends to invest more in the Palm platform to extend webOS to new form factors. The company also said it will invest to extend Palm's reach in the developer community.

"We anticipate that with the webOS, we will be able to deploy an integrated platform that will allow HP to own the entire customer experience, to effectively nurture and grow the developer community and to provide a rich valued experience for our customers," Bradley said in a teleconference for investors that was webcast. "With Palm, HP acquires a strong operating system to deliver a unique customer experience."

Though HP picked up the iPaq handheld device portfolio with its $20 billion acquisition of Compaq Computer in 2002, the company never successfully was able to use that franchise to develop a successful smart phone. Bradley did not address the future of the Windows Mobile-based iPaq but said HP remains a key Microsoft partner. He did not say whether HP will also support Microsoft's Windows Phone 7 platform, due out later this year.

By acquiring Palm, HP gains Palm's ties to the major wireless carriers -- AT&T, Sprint and Verizon. While sales of Palm's newest devices have been lackluster, analysts have praised the device and the webOS platform.

Indeed, Palm lost its way several years ago following the huge success of Apple's iPhone and Research in Motion's BlackBerry. Its aging PalmOS platform needed to be revamped and it wasn't until last year that Palm released webOS and the first two devices based on the platform, the Pre and Pixi. Palm's effort to woo developers was not without controversy, as reported.

HP said Palm chairman and CEO Jon Rubenstein will remain with the company. Rubenstein is credited with developing Apple's iPod -- the platform that the company would extend to build its successful iPhone and iPad lines.

In two rather ironic twists, HP for several years resold the iPod under its own brand, but the two companies parted ways after three years. Also HP's Bradley was Palm's former CEO before coming to HP five years ago.

While the move could boost Palm, thanks to HP's strong distribution reach, it faces formidable competition from Apple, Research In Motion and devices based on Google's Android platform. Palm webOS also will face competition from devices based on Microsoft's forthcoming Windows Phone 7. HP also recently acquired networking supplier 3Com, which spun off Palm in the late 1990s.

Shareholders of both companies have approved the deal, which is expected to close by July 31.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.


  • Microsoft Buys Orions Systems To Enhance Vision AI Capabilities in Dynamics 365

    Microsoft announced on Tuesday that it has acquired Orions Systems with the aim of enhancing Dynamics 365 capabilities, as well as the Microsoft Power Platform.

  • Microsoft Hires Movial To Build Android OS for Microsoft Devices

    Microsoft has hired the Romanian operations of software engineering and design services company Movial to develop an Android-based operating system solution for the Microsoft Devices business segment.

  • Microsoft Ending Workflows for SharePoint 2010 Online Next Month

    Microsoft on Monday gave notice that it will be ending support this year for the "workflows" component of SharePoint 2010 Online, as well as deprecating that component for SharePoint 2013 Online.

  • Why Windows Phone Is Dead, But Not Completely Gone

    Don't call it a comeback (because that's not likely). But as Brien explains, there are three ways that today's smartphone market leaves the door open for Microsoft to bring Windows back to smartphones.

comments powered by Disqus

Office 365 Watch

Sign up for our newsletter.

Terms and Privacy Policy consent

I agree to this site's Privacy Policy.