HP Buys Linux, Virtualization Tech from Phoenix

Hewlett-Packard will purchase assets owned by Phoenix Technologies, including HyperSpace, a Linux-based operating system that allows PCs to boot rapidly. Phoenix previously signed an agreement with Samsung to deliver instant on-off capabilities to netbooks. HP has been focused on acquisitions of late, particularly the April purchase of Palm for $1.2 billion. Palm's WebOS will likely go into future HP products such as tablet PCs.

Hewlett-Packard agreed June 10 to purchase assets owned by Phoenix Technologies, including a Linux-based operating system and client virtualization software, in a deal worth $12 million in cash. The products in question are Phoenix's HyperSpace, HyperCore and Phoenix Flip.

HyperSpace is a Linux-based operating system that allows a PC to boot rapidly, a key capability for portable devices such as netbooks and laptops. The other Phoenix assets acquired by HP center on client virtualization, including HyperCore, which enables HyperSpace to run specialized core services alongside Windows.

"We are very pleased that HP has agreed to acquire these assets relating to Phoenix's HyperSpace, given HP's rich history of innovation and product differentiation," Tom Lacey, president and CEO of Phoenix, said in a statement.

The deal is expected to close in June. Phoenix has been divesting itself of "noncore assets" in order to better focus on its CSS (Core Systems Software) business, including the sale of its FailSafe and Freeze assets in April. Phoenix has also made agreements with other tech entities in recent month. Phoenix and Samsung announced a strategic partnership in October 2009 to deliver instant on-off capabilities and long battery life to netbooks.

HP has engaged in some recent acquisitions. On April 28, HP announced it would acquire Palm for $1.2 billion; on that date, Todd Bradley, executive vice president of HP's Personal Systems group and a former Palm executive, said in a Webcast that HP saw not only a $100 billion smartphone market, but a chance to apply Palm's assets toward "additional connected mobile form factors" such as tablet PCs.

Palm was responsible for the Palm Pre and Pixi-two smartphones that, while generally well-reviewed, generated relatively anemic sales-along with the Palm WebOS, an operating system for mobile devices. "We anticipate that with the WebOS we'll be able to aggressively deploy an integrated platform that will allow HP to own the entire consumer experience, to nurture and grow the developer community, and provide a rich media experience for our customers," Bradley told the Webcast audience.

Research company IDC said in a report April 28 the Palm WebOS is positioned for a "relatively easy migration" to tablet PCs, which have become a more enticing market for manufacturers given the Apple iPad's initial success. IDC said it expects the tablet market to grow to 7.6 million units by the end of 2010, and to approach 50 million units by 2014.