TechLahore

The Palm Campus (Image credit: Palm Corp.)

This news doesn’t make me particularly happy, because a great, innovative company that pioneered the handheld market has been gobbled up today for a paltry sum that may be less than the value of its patents alone. But I have to say, I did see this one coming. Almost two years ago I predicted that Palm would launch a Hail Mary piece of technology at CES and would expect its fortunes to turn… but that this hope would not materialize. About 5 months ago I predicted that Palm would lose out to the smartphone competition and would meet some form of doom in 2010. Lo and behold, both predictions came true. Palm didn’t shut down and go bankrupt, but then companies of its size that don’t have massive debt exposure seldom do. What did happen is that Palm was effectively picked up arguably for less than the price of its assets and it is now part of the HP behemoth. To put things in perspective, HP’s annual revenue (not market cap!) is about 100 times greater than what it paid to buy Palm. How’s that for scale…

So the question is now that Palm is part of HP, what will HP do? Will HP continue its partnership with Microsoft when it comes to mobile devices and phones? Will we continue to see Windows Mobile powered HP iPaqs? With the new HP tablet around the corner, will that run Windows, Windows Mobile 7 or Palm’s Web OS?

Clearly, HP has strengthened its position viz Apple with this buy. An HP tablet or phone with WebOS probably has a better chance of success given the accolades WebOS has received for usability. The biggest challenge that Palm was unable to surmount was simply attracting developers to the Palm ecosystem and getting WebOS apps developed to deliver the kind of variety of options the iPhone, and to a lesser extent Android, does. Perhaps with HP’s deep pockets – over $15B in cash on hand – and a massive partner base, this can change. If there’s on thing HP should focus on post acquisition, it is the developer eco-system.

Where this acquisition does become somewhat challenging for HP is that HP has never been a software company. Yes, they’ve built software, but it’s always been “that other thing we do”. Never the focus. With the Palm acquisition, the battle is not going to be fought so much over the device as it is over software. Unless HP changes its way of thinking and positions itself to truly leverage the software assets it is picking up, WebOS will go to waste, and with it the potential of a new mobile application eco system.

The future of HP/Palm is going to be interesting. First, let’s see how quickly HP is able to integrate this acquisition to enrich its current product line. There is talk of the HP tablet being equipped with the WebOS, and personally, I’m keen to see it in action!

And with that, a final salute to the great pioneer, Palm Computing. The King is dead. Long live the King!

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