Everybody Wins

Earlier today, HP and Palm announced a merger deal in which HP would pay 1.2 billion dollars to acquire the assets of Palm, Inc.

The deal essentially keeps Palm alive. For now.

What HP is really buying in this deal is webOS. The linux-based Operating System developed by the Palm team has proven to be a wonderful mobile platform and has lots of potential.

HP has tried their hands in the smartphone arena in the past with little or no success. They have made some nominal attempts, but have never really had any serious presence or mindshare in the business. That could all change with acquisition of Palm. It immediately give HP the largest presence in the smartphone market they’ve ever had. It also gives them access to the intriguing webOS platform. The hopes are that with HP’s cash reserves and engineers, they could propel webOS to even greater heights and continue its ongoing development.

On paper, this looks like a perfect marriage and a win-win deal for both firms. On paper. There are still problems that need to be addressed.

1. The Palm Pre has not sold nearly as well as Palm originally hoped or forecasted meaning it has not captured the imagination of enough users.

2. HP has taken swings in this business before, and failed. They have proven that either they don’t understand the space or simply aren’t devoting enough resources to be successful in it. Either way, they will need to step things up.

3. The smartphone market is already incredibly competitive and getting more competitive every day. HP will now be competing directly with Apple, Google and HTC for a slice of the pie.

This deal is intriguing on many levels. Personally I’m glad to see Palm survive, even in a diminished capacity. I sincerely hope HP’s resources and Palm’s innovation are a good match. The smartphone market just got a little more interesting.