HP Is Buying Palm

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HP is going to acquire Palm in a deal worth about $1.2 billion. HP, which has a long history of making smartphones using Microsoft Windows Mobile operating system, will switch to Palm’s webOS.

Todd Bradley, the head of HP’s Personal Systems Group, explained his company’s reasons for this acquisition:

“Palm’s innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices. And, Palm possesses significant IP assets and has a highly skilled team. The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share. Advances in mobility are offering significant opportunities, and HP intends to be a leader in this market.”

Palm is going to be run as a separate business unit inside of HP. Palm is going to contribute its expertise in developing what HP describes as a “world-class mobile operating system and platform” while HP is going to give Palm the financial backing the company needs to compete successfully with larger rivals like Microsoft and Google.

HP and Palm
In the beginning of the current decade, Palm and HP were bitter rivals in the PDA market. HP made the iPAQ line using Microsoft’s Pocket PC operating system (later renamed Windows Mobile) and Palm made handhelds with its own Palm OS.

As the years went by and the market shifted to smartphones, both companies struggled to make the transition. Palm has been a bit more successful in this area, as its webOS has received much praise from reviewers, while the handful of iPAQs released recently have garnered little or no attention.

But HP is buying Palm, and not the other way around, because HP has a very successful line of laptops and PCs, while Palm’s device sales have been weak in the face of tough competition from Google’s Android OS and the Apple iPhone.

The man who heads up HP’s smartphone division is already very familiar with Palm; Todd Bradley was the CEO before moving to HP in 2005.

Details of the Deal
According to the terms of the agreement between the two companies, HP will pay $5.70 in cash for each of Palm shares.

The transaction has been approved by the HP and Palm boards of directors, and is scheduled to close at some point during HP’s next fiscal quarter, which ends July 31.

Palm is going to be run most by its current management team, as a Palm’s chairman and CEO, Jon Rubinstein, is expected to remain with the company.

Source: HP

There is an intense discussion on the HP/Palm deal going on in the Brighthand Forums — feel free to join in.

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