Palm's WebOS mobile platform was said to be a list-topping asset, when the smartphone maker went shopping for a purchaser. And indeed, following the April 28 announcement that HP will acquire Palm for $1.2 billion, analysts are agreeing that WebOS was a major factor in the decision, particularly as it could potentially help HP compete more effectively in the growing tablet market.
Additionally, while a tablet running WebOS would diversify HP's mobile offerings and arouse new interest, it could potentially strain the PC leader's longtime relationship with Microsoft-with which it has previously developed tablet PCs.
"We believe at the end of the day this deal is about Palm's WebOS operating system. While there are only about 2,000 applications supporting WebOS, it is considered to be an easy platform for developers to create new applications," several IDC analysts wrote in an April 28 report. "Additionally, WebOS' similarities [to] Linux-based PC distributions [make] it a much easier transaction for PC-focused developers to get into mobile apps-something that as the leading PC maker HP should be able to capitalize on and galvanize support for."
Ovum analyst Tony Cripps agreed in an April 29 report, saying, "WebOS could indeed become a major asset for HP and obviously has scope for use on devices such as tablets-Palm's engineers and designers clearly put a lot of time and effort into creating a very slick user experience."
Despite the April 23 resignation of Palm's senior vice president of software and services, Mike Abbott, the continued presence of current Palm CEO Jon Rubinstein, as well as other members of WebOS team, has also been pointed to as a coup for HP.
IDC, too, has said it believes that WebOS is positioned well for a "relatively easy migration" to media tablets-a space that IDC expects to grow to 7.6 million units by year's end, and to approach 50 million units by 2014.
"However, unlike in the PC business, [HP's] investment and marketing will not be shared with Microsoft; it will be HP's alone to bear," IDC said in its report. "This acquisition will stress HP's relationship with Microsoft, but given the company's scale and likely continued support of Windows 7 Mobile, it will not seriously damage it."
On April 29, however, TechCrunch, citing "a source who's been briefed on the matter," reported that HP intends to kill its planned "Slate" tablet with Microsoft and to release the device later in 2010 with an adapted version of WebOS. HP has offered no such information.
While Apple, with its newly released and so far successful iPad, has breathed new life into the tablet form factor, Technology Business Research analyst Ken Hyers said he believes the space is still wide open for competition.
"[The] tablet computing space has not yet been well defined by any single manufacturer or OS, giving HP, with its extensive PC manufacturing expertise, a chance to become a key player in the new market segment," Hyers wrote in an April 29 report.
The Palm acquisition gives HP leverage to compete against Apple, Hyers added, in Apple's effort to use the iPad "to redefine the tablet PC space in the same way that it did for digital music players and smartphones."
That said, HP will still have its line of enterprise-geared tablet PCs with Microsoft, as well as a number of iPaq handsets, not to mention PCs, which together should keep the Microsoft-HP relationship on good terms.
And while the current HP tablet PCs running Microsoft don't have a great user interface, since Microsoft basically tried to translate a PC OS to a tablet, Hyers told eWEEK, "with the release of Windows Mobile 7 at the end of the year, that gives Microsoft and HP a chance to reset the Microsoft tablet initiative. Because with Windows Mobile 7 you will have an OS that's specifically developed for a touch-screen environment."
Hyers added, "You won't hear an end to HP's Microsoft products any time soon. No enterprise IT manager has ever been fired for buying Microsoft products."