The Buddha’s Palm – acquisition time nears

One of the great downsides of being psychic is trying to convince the unbelievers and skeptics of the world regarding your abilities that seemingly defy logic and sanity. Last week, RCR readers got several day’s head start on the climactic final move of Palm’s end game.
Now, it’s official, Palm is “officially on the block,” and timing is everything.
As to the players, I had forecasted LG as a logical acquirer and for all the reasons outlined in my previous analysis, I still believe the firm is the gold standard buyer for Palm.
Bloomberg, however, cites HTC and Lenovo as the two companies most interested in buying the company and its IP assets.
All three of these companies can use their expertise in hardware manufacturing to squeeze out profitable and innovative hardware combined with the soul of Palm – allowing any of them to execute the mystical and mythical “Buddha’s Palm”.
The legendary Buddha’s Palm kung-fu move of ultimate power combined a harmonized body and soul to overcome an enemy – but who is truly the hidden master here, that is the question.
HTC makes some of the hottest mobile hardware on the planet as an OEM/ODM as well as under its own nascent brand here in the US. Putting Palm’s webOS on its hardware could make for a most potent matchup – but would also rile its mainstay ODM business.
It’s also worth noting that Android is a primary market segment for HTC these days, what with building the Google-branded phone plus many other devices supporting Android for vendors and network providers alike.
Cher Wang, co-founder of HTC, is one of the sharpest, most visionary individuals in the business.
She is brilliant, a risk-taker and buying Palm would definitely be a risk for HTC in alienating that core ODM side of the company.
If Wang wants to build a US Smartphone brand, webOS mated with cutting-edge HTC hardware is a match made in heaven – but it comes with a potentially heavy cost of alienating many key customers.
So why take the risk then? In a word – patents. Palm has patents that could prove invaluable to HTC in negotiating a settlement with Apple, who recently sued the company for infringement.
This would be a daring move for HTC, if it was indeed in play for snapping up Palm – but never bet against Cher Wang. HTC certainly has the hardware and the volumes to make webOS a major player.
The question for HTC would be whether to keep the Palm brand or use webOS as the platform to leverage HTC to a major brand name in the US – only time will tell.
As for Lenovo, the firm would be buying its way into the mobile phone market, with a near complete package, from brand to hardware to software to network provider contacts.
Lenovo, however, would presumably still be saddled with Palm’s less than cutting-edge hardware – unless there is a killer new device in the labs, which is always possible.
Lenovo has a history of buying market share via established name-brand acquisitions – as it did when it purchased the IBM PC/laptop brand years ago.
I am less enthused with the prospect of Lenovo getting Palm, simply because there is less the firm can innovate with than HTC – but in some ways it makes more sense than HTC – at least on the surface.
So – the next week will be telling and the vultures are certainly circling over the still warm carcass.
Indeed, it may be too early to tell whether any of the aforementioned firms can bring about a phoenix-like rebirth of Palm, or simply devour the carcass and move on, hungry for more.
There is no question that consolidation is good for the industry – now let’s just hope the innovative technology that is the soul of Palm finds its proper home.
–
Jonathan Hirshon is the Principal of Horizon, a marketing and communications consultancy based in Santa Clara, CA. Called “The Guru of Silicon Valley” by BusinessWeek, he is acclaimed for his technical and marketing insights and provides counsel to a number of international high-tech startups and has previously advised Apple Sony and a number of other industry leaders – details at www.horizonpr.com or contact him at jh@horizonpr.com