Palm to Land in HP's Hands for $1.2B — webOS Will Be Resurrected

Updated: After weeks of speculation that Palm could fold or be acquired, a buyer has come forth — HP has announced that it’s agreed to purchase Palm for $5.70 per share, or roughly $1.2 billion. The deal, which adds Palm’s patent portfolio and the webOS operating system to HP’s coffers, could subsequently give webOS a new lease on life for current and future smartphones, if not other mobile devices.

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Palm wowed many with webOS when it first introduced the platform at the 2009 Consumer Electronics Show, but the excitement has since turned to disappointment. Sales of Palm phones running atop it were hampered by a 6-month exclusive launch with Sprint which was bleeding customers, and by the time Palm could take its Pre and Pixi handsets to Verizon, that carrier had committed $100 million in advertising — to the Motorola Droid. Add to that the fact that webOS hasn’t attracted the widespread attention of developers and you can see why consumers have turned their backs on Palm. Om has chronicled Palm’s journey in detail.

So HP could save Palm’s smartphone platform, but perhaps a more interesting scenario would be for HP to combine Palm’s webOS with HP’s hardware design and experience. The company is already preparing its Slate device with Microsoft Windows 7, but as I’ve said repeatedly, cramming a desktop operating system into a mobile device isn’t optimal. Now that HP is about to own the webOS operating system, perhaps we should be looking for a different slate tablet from HP — one that runs webOS and multitasks like a champ.

Update: After listening in on the conference call featuring Tom Bradley, EVP of HP’s Personal Systems Group and a former CEO of Palm’s software group, HP has essentially spent $1.2 billion to buy Palm’s webOS and patents.

Bradley emphasized that HP plans to release smartphones, tablets and
maybe even netbooks using webOS and that it will back the platform
with a significant sales effort as well as a heftier R&D budget than
Palm was spending.

Words and phrases used repeatedly in the call such as “accelerate” (HP’s entry into mobile computing) “cloud-based services” and “integrated customer experience” made it apparent that HP is planning to develop a mobile computing platform that it can link with its other products.

Bradley noted that it plans to do this in both the consumer and the enterprise realm. When asked if HP will pursue a content strategy akin to Apple’s Bradley said, “We’re not content creators but we are access providers,” and then declined to go into specifics.

He also declined to elaborate on what the acquisition might mean for HP’s relationship with Microsoft, which is a strategic partner of HP’s. As for why HP didn’t decide to focus its efforts on Android, Bradley said that he believes the mobile market is still in its early stages and stressed that with HP’s backing and investment in webOS, he believes it will be a more compelling platform.

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