HP has come to a definitive agreement to purchase Palm in a deal valued at $1.2B. The deal is subject to regulatory approvals and is expected to close in HP's third quarter.
Palm has been struggling for some time in terms of both its market position and financial viability. The worldwide mobile phone market is transitioning from classic mobile phones to multifunction smartphone devices that combine the best consumer features with applications that extend the corporate computing environment into the mobile world. However, smartphone operating systems are also starting to compete with traditional operating systems, pitting slate devices, like the Apple iPad, against low-end laptops and netbooks.
HP's Personal Systems Group is developing a set of products to capitalize on the anywhere/anytime computing paradigm that will include notebooks, netbooks, the upcoming HP Slate tablet (to be released in June), and smartphone devices. The Palm acquisition gives them both the smartphone device and most importantly an operating system in Palm’s WebOS that they can deploy across the family of devices. HP could succeed with an enterprise slate device running WebOS, especially given Apple’s refusal to allow the iPad to run popular enterprise runtime virtual machines like Java and Adobe Flash. Apple’s strict application development policies, resulting in less enterprise value for the iPad, could be exploited by HP.
Currently, Blackberry sets the standard for extending the corporate computing platform into the mobile space. IT managers are comfortable with its feature set, its manageability and its security in the corporate environment, but increasingly they are under pressure to connect more consumer oriented devices such as iPhones into the secure corporate infrastructure.
“An HP/Palm offering may well represent a credible middle-ground alternative, given their comfort level with HP as an enterprise solution provider, and the well regarded features of the Palm OS which enable things like universal search and social media integration,” said Tim Hickernell, Lead Research Analyst for Info-Tech Research Group.
HP is serious about leveraging their portfolio of products across the computing paradigm from data center, through desktop to mobile device. This acquisition could benefit enterprise users and add much needed competition for Apple’s iPad as an enterprise computing device.
