PC maker HP buys Palm for $1.2 billion

No. 1 computer maker Hewlett-Packard has snapped up flailing phone maker Palm for $1.2 billion, giving the PC firm a huge boost in the mobile computing and smartphone market.
The deal has been given the go-ahead by the boards of directors at both companies and is valued at $5.70 per share.
In a statement, HP executive VPTodd Bradley – incidentally a former Palm CEO – noted “The smartphone market is large, profitable and rapidly growing,” adding that “Palm’s innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices.”
HP’s existing mobile devices – a legacy from its Compaq acquisition days – are certainly nothing to write home about, made up mainly of uninspiring Windows Mobile handsets. Buying Palm could catapult the firm straight into the phone fray, which some would argue only really has three main players – Motorola, Samsung and Nokia.
With Apple and RIM making only smartphones, and HTC working mainly as an ODM, the phone market desperately needs another phone maker to drive competition.
Palm had been struggling financially of late, despite its acclaimed handsets and WebOS operating system. “No one wanted Palm to go away,” a source close to the Telco industry told RCR. “WebOS is good, Palm just executed poorly and was late to market, but consumers can really benefit from the firm’s innovation.”
HP’s move is seen as a play toward a broader mobile strategy as tablets become more and more popular. It is also a blow to rival PC maker Dell, which has also been trying to make headway in the mobile market with its own phones and upcoming tablets.
Buying Palm is critical to HP’s mobile strategy success for a number of reasons. Firstly, it may mean consumers will end up seeing WebOS move to netbooks and tablets to compete with the likes of Intel/Nokia’s Meego and Google’s Android. Secondly, it would give HP a huge amount of invaluable mobile patents and handset know-how.
It would appear HP wanted to buy Palm before the company started licensing out WebOS for cash, which would have lowered the firm’s value to any potential buyer.
Perhaps HP even plans on reviving its iPAQ lineup, or pushing WebOS onto tablets which can compete with Apple’s iPad and the slew of upcoming Android based tablets.
Indeed, there are a multitude of possibilities for what HP could do with Palm, from smartphones, to tablets, to netbooks and more.