Despite grandfathering the concept of smartphones with personal digital assistants, Palm hasn’t been doing this well recently – so the Palm HP buyout that has been announced this week could not come at a better time. The $ 1.2 billion loan till payday for Palm is giving HP the OS, intellectual property, and phone handset designs of Palm.
HP purchase saves faltering Palm
HP Palm partnership is surely coming at a very good time for Palm. Palm has been struggling, besides good reviews for its new operating system. The technology behind Palm wise phones has been well-reviewed, but a combination of slow sales and frustrating design have meant that Palm’s revenues are falling to dangerous levels. The latest SEC filing of Palm outlined the problem – slow sales and low order volumes.
Plans for Palm
Some Wall Street investors have questioned HP’s purchase of Palm. It seems a little odd that a business would pay $ 5 a stock for a company that was trading at $ 1 two years ago. It certainly seems that HP might have plans for the Palm operating system. In the HP Palm purchase announcement, HP outlines its strategy as “creating a mobile ecosystem” that “leverages HP’s channel and enterprise connections”. The translation of this is that HP can be distancing itself from Windows as it enters the tablet and mobile markets.
Will HP Slate run the new Palm OS?
Though HP has been a strategic partner with Microsoft for a very long time, HP may very well be using the HP Palm partnership to get a new operating system. The HP Streak 3 or 5 might require a a lot more lightweight operating system than what Windows 7 can offer. Since the HP Streak could be a smartphone also as a slate, the Palm OS would be a good match. Using the Palm OS would keep HP from being beholden to Window’s release regulations. Though Apple’s dominance is difficult to challenge, Palm and HP partnering might be able to make a go of it.
HP Palm to merge in July
There are still regulatory hurdles for HP Palm to jump over. The merger needs to be approved by the stockholders of palm and US regulatory agencies. If the HP Palm merger is approved, HP will become complete owner of Palm around July 2010.
Resources
HP Press Release
Palm SEC filings
ZD Net
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