Hewlett - Packard plan to buy struggling telephone set Godhead Palm for $ 1.2 billion .
The proclamation , which came just after the U.S. stock market close on Wednesday , follows hearsay this week of a number of suitors , including Lenovo and HTC , vying to buy the iconic make .
Palm last class released a Modern operating system , WebOS , that now runs on two phone models . But amid tough contender from Apple ’s iPhone and Google ’s Android phones , Palm scramble to trade the phone . During its last salary call , Palm said it had a large stock of phones that had n’t yet been sold and that next earnings would be lower than expected .
The acquisition should provide a much - needed extract of Johnny Cash to exert exploitation of Palm ’s technologies . “ The focal point now goes from financials to what the gimmick can actually do , ” said Chris Hazelton , an analyst at the 451 Group .
HP said it will increase the $ 190 million that Palm spends each year on research and development , and fund extra gross revenue and selling activities .
“ We intend to invest heavily in product development and go - to - marketplace capabilities to beat back this securities industry , ” say Todd Bradley , vice president of HP ’s personal organization grouping and formerly a chief operating officer of Palm , during a conference call to discuss the deal .
While HP hopes to win a bigger slicing of the produce smartphone food market , it also hopes that Palm ’s engineering can facilitate it make inroads in the fledgling market place for slate electronic computer . “ We see extra opportunity beyond smartphones , ” Bradley say , cite slate , or pad , calculator . Palm ’s WebOS currently runs only on phones .
The slate grocery store could be a central growth area for HP , said Jack Gold , analyst with J. Gold Associates . “ Since tablet are primarily front ends to the Internet , it allow HP to deploy many swarm - based services from which it can generate revenues , include those in an app store , rain buckets service of process , etc . , ” he said .
Using WebOS alternatively of Windows on an HP tablet would represent new competition for Microsoft . HP has already said its first tablet will play on Windows 7 .
HP also sell Windows Mobile phones but has a very small presence in that marketplace overall . “ HP ’s Windows Mobile headphone business is become flat a rapid expiry , ” Gold said .
Bradley say vaguely that HP will continue to be a strategical partner for Microsoft , but it was indecipherable whether he meant in the telephone commercial enterprise or only the PC business sector .
Buying Palm to boost its phone business , rather than designing new phones to function on Microsoft ’s latest telephone set package or choosing Android , could keep HP sentence and expense , Gold said . “ decoration brings HP a modern and militant platform that is already plan , implemented and in output . This saves HP many R&D dollar as well as dramatically accelerates sentence to food market , ” he said .
laurel wreath offers a “ treasure trove of technology that can be leveraged in future products , ” said Charles King , principal analyst at Pund - IT Research . “ It seems like a relatively cheap risk for a potentially rich return , ” King suppose .
If HP come after in building a strong Palm , it will be a “ formidable competitor ” to Google , HTC and Nokia , Gold said . “ Relatively unmoved by this skill will be [ Research In Motion ’s ] BlackBerry and Apple ’s iPhone , at least for the foreseeable time to come . They have their own user fundament and market segments that are unlikely to find WebOS compelling , ” he say . Still , HP has a potent mien with enterprises , where it may have fate sell Palm devices , he said .
Not all analyst think the attainment is a unspoilt move though . “ HP needs a strong presence in Mobile River , but Palm does n’t deliver that , ” say Charles Golvin , an analyst at Forrester Research . HP would have done better to prove to hire off Palm ’s people separately for a much lower damage , he said . With the accomplishment , HP is getting the Palm sword and cerebral place , neither of which HP needs , Golvin say . In gain , he does n’t think that the WebOS platform is “ viable in the recollective term in the face of competition . ”
HP require its scale and global reach to help drive down the cost of making WebOS devices and boost sales . The caller also hope to further the WebOS developer residential area to tug more diligence for the platform . There are currently 2,000 applications available to WebOS phone users .
Palm ’s OS and hardware are solid , Hazelton say , but a serial of stumble and bad timing left the company badly in indigence of a backer . Its newfangled phones were usher in after the iPhone already had pregnant adhesive friction and Android devices were on the market . “ Then [ Palm ] went with the improper postman . If they ’d gone with Verizon and launched within days or weeks or even a calendar month or two after their first announcement , it would have been good for them , ” Hazelton said .
Instead , Palm launched with Sprint , which has been charge for failing to adequately promote the Pre , the first French telephone with the novel operating system . Palm herald the new software system in January last twelvemonth and start out offer the phones in June .
Hazelton expect HP to keep back the Palm brand , and mayhap to give the society some autonomy to operate essentially as its own entity . HP say Palm will become a business whole within the company .
Palm is best know for basically creating the PDA ( personal digital assistant ) market , with the iconic Palm Pilot . The companionship began to lose its footing when the PDA food market tapered off and Palm was obtuse to transition to the smartphone business . The last of its remaining founders , Ed Colligan , left the company last June .
Palm ’s current CEO , Jon Rubinstein , will stay with the caller . He is perhaps well known for his part in developing the iPod for Apple . HP would not describe any retention program that might call for Rubinstein to stay for a certain period of sentence after the lot is completed .
Agam Shah in New York contributed to this story .
