What’s Palm’s Next Move?

Palm's CEO Jon Rubinstein at CES 2010

Palm’s recent launch with Verizon Wireless has failed to generate any momentum for the company, putting the company’s long-term prospects into question.

So, what can Palm (NSDQ: PALM) do? Given that its new webOS is a worthy contender and stacks up nicely against the iPhone, Android and others, it must have options. One solution could include identifying a buyer or partner for the company. Right now, it’s largely a niche player, and should be looking for a company with deep pockets, strong relationships with developers and a good distribution network.

That shouldn’t be so hard given that so many companies are looking to get a piece of the smartphone action. In fact, it’s no wonder something hasn’t happened already.

There’s three potential suitors that immediately jump to mind, and likely there’s others, too. Nokia (NYSE: NOK) and Dell have long been rumored to be potential buy-out candidates. Those are still attractive options. A third one could be HP, which despite its line of iPaq smartphones running the Windows Mobile, has been completely overshadowed.

In particular, Nokia remains a strong prospect for buying Palm, or licensing its software. At Mobile World Congress last week, it announced it was merging its Maemo operating system with Intel’s Moblin operating system to create MeeGo. Both operating systems are based on Linux, like Palm’s. In doing so, both Nokia and Intel (NSDQ: INTC) will just fall further behind, and confuse the market further. The first release of MeeGo is expected in the second quarter of this year with devices launching later in the year. In contrast, Palm’s webOS is already a fully baked product with a small, but growing ecosystem. And, while Palm has accumulated debt while trying to get off the ground, together Nokia and Intel should be able to cover it.

Another candidate is HP, which continues to say that it is serious about smartphones, even though handset sales have fallen about 80 percent over the last five years, reports the NYTimes.

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