Palm Deal Gives HP Chance to Revitalize Smartphone Business

By Wayne Rash  |  Posted 2010-07-02

Palm Deal Gives HP Chance to Revitalize Smartphone Business

Hewlett-Packard's completion of its Palm acquisition July 1 means that the smartphone business has a new, highly important player that could change the landscape in ways that matter to enterprise users.

By buying Palm, HP gets access to its current devices, the Pre and Pixi in both regular (for Sprint) and Plus (for Verizon Wireless) editions, but it also gets WebOS. While the devices and the existing sales outlets are important sources of revenue for HP's new division, they're not the main reason this acquisition took place.

HP really needs a new mobile operating system. For years now the company's generally well-designed devices have been saddled with one version or another of Microsoft's stodgy Windows Mobile OS. This meant that users had an interface that was impossible to love, that was inefficient and that didn't offer a ready source of the kind of applications that every other smartphone from Android devices to Research In Motion's BlackBerrys was featuring. So HP's iPaq was selling, slowly, to business customers that already had a deal with HP, could get it for a low price and needed a device that would work with their Exchange servers.

So now that HP owns Palm, what next? There will be a period of integration in which Palm employees decide whether they like working for a massive corporation with a global reach. There will be some false starts and pondering as HP and Palm try to figure out where Palm's products fit into HP's universe, and there will be a new effort to design platforms using HP's hardware skills and Palm's WebOS.

During that time, Palm engineers will be trying out the HP corporate culture. HP will be trying to find ways to get as many of them as possible to stay. For Palm's engineers, at least, this could be the best possible outcome. Unlike most other megacorporations, HP is extremely decentralized. The company's divisions operate almost autonomously, and the culture in different divisions can be quite diverse while still existing happily under one corporate umbrella.

In addition, Palm's engineers will find that they suddenly have access to a breadth of financial and development resources far beyond anything they've experienced. HP has a long history of innovation, and it has divisions making virtually any device you can think of.

In addition, Palm's engineers will have a new mission that they couldn't have had the ability to accomplish in the past-to develop an enterprise-capable tablet device that will rival the iPad in ease of use, with a real enterprise-class mobile operating system and a broad customer base.

Palm Gets New Chance to Shine in Mobile World

But wait, as they say in television infomercials, there's more. Palm has already said it will continue developing smartphones using WebOS. The company has had some success with its existing devices. Some money for development and access to far larger markets could allow the company to take advantage of the device market it pioneered with the legendary Palm Pilot.

Remember, it was Palm that first brought you the touch-sensitive full-screen device that worked as an e-mail platform, organizer and Web browser. Those Palm devices-the latest being the Palm TX-aren't being sold by Palm any longer. But the technology still exists and it's a safe bet that it could play a role in developing a touch-screen tablet and phone that could compete with the iPhone and Android devices out there.

Equally importantly, the Palm devices have a large number of applications and their own application store, just as there were thousands of apps available for the Palm Pilot before it was discontinued. The HP and Palm teams could become a real force in the mobile device market, but, of course, a great deal depends on whether these companies can merge in such a way that they can take advantage of their respective talents and assets.

And, of course, everything depends on whether the now merged companies can pull it off. HP has to be willing to accommodate Palm's corporate culture, keep its engineers and developers happy, and provide them with the resources they've always needed and never had. Palm, meanwhile, has to learn that its only hope for survival was to be acquired by some other, larger, company. If it had to pick one that would give Palm the freedom to develop something really good, it would have been hard to pick a better partner than HP.

But saying that and seeing it happen are two different things. HP still faces many obstacles involved in its acquisition of Palm before anyone starts seeing results that matter. Palm's people have to learn to work within HP's corporate structure so that they can effectively utilize the company's vast resources. There is huge potential here, but right now that's all it is. Perhaps, if everything works, we'll see a new reality in the mobile device market in a few months. That would be a nice change.

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