Hewlett-Packard Co. has announced that they are buying Palm for $1.2 Billion dollars, debt and all. Which works out to $5.70 dollars a share which is almost a 25% premium on the stock before the announcement was made. So what does it mean for Palm to have HP, RIS' number one technology company (RIS Retailer Info Systems News January 2010), behind them?
Benefits to Palm:
- Increased R&D Budget, Palm is estimated to have been spending $190 million a year and HP is looking to increase that.
- Strong commitment to open source and webOS is built on open source technology.
- Increased ability to scale and a greater global reach.
Benefits to Hewlett-Packard:
- Palm's Intellectual Property
- webOS (Palm's Intellectual Property)
- Innovation (Palm's Intellectual Property)
The common theme in HP's acquisition of Palm is webOS. So the question is why buy a whole company for webOS, instead of using Google's Android platform? HP believes that the Smartphone, Netbook and Tablet markets are still in early stages. They want to push webOS as a primary platform and believe that the developers will follow. Also HP is “focused on leveraging several large carriers instead of large numbers of small carriers.” HP provides infrastructure for eight out of ten of the largest carriers in the world and plan to use that leverage. This would enable Palm to have greater market penetration then it currently has.
In answering the question of how HP plans on positioning webOS in the coming years, they mentioned that Palm already has the Pre and Pixi out. But they also mentioned that there is enormous interest on the commercial side with vertical deployments, as well broad opportunities for consumers. HP likes choice and plan on keeping their partnership with Microsoft, but are looking to create a unique HP experience with their acquisition of Palm, “... with the webOS we will be able to aggressively deploy an integrated platform that will allow HP to own the entire customer experience.” So even though the HP Slate is scheduled to launch with Windows 7, don't be surprised when you see a Slate running webOS in the near future. This adds to the growing market of serious mobile commerce players, retailers would be well advised to start planning, if they haven’t already, for growth in this area.
HP to acquire Palm Slides and Transcript