Lenovo Wants in on Smartphone Biz, Acquiring Palm Could Be the Ticket

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Computing giant Lenovo hopes that within five years, up to 20% of its revenues may come from mobile Internet devices. Could Lenovo buy Palm?

Lenovo's president and COO Rory Read made his points pretty clearly—he noted that his company plans to sell "millions" of smartphones in the next several years, plus portable devices such as netbooks, building up to tens of millions in time.

Read is, in one sense, confirming that his company has its finger firmly on the pulse of technology: We know that smartphones, with fully capable mobile Net powers, are the future of cell phone tech, and that growth in this sector will easily outstrip sales in traditional PCs fairly soon (the paradigms sparked off by new smartphone tech, and even new device genres, thanks to the iPad, will see to this). So while only a very small percentage of Lenovo profits come from mobile Net devices at the moment, aiming to embrace the tech swiftly is a very smart idea.

We've heard the rumor floated before that HTC is pursuing Palm. But Lenovo has twice as much to gain. For one, we already know Palm's Pre and subsquent webOS smartphones have surprised the market and delighted many a user since their launch, and WebOS, with its innovative design, might be the treasure HTC and Lenovo would both be after. Secondly, the smartphone market is jam packed with some dominant industry leaders that won't be relinquishing their commanding positions any time soon. Lenovo is not a name particularly associated with the phone market space (the brand is more likely to conjure images of business computing). Acquiring a company to gain a foothold in the market, leveraging off a pre-existing known brand name and the unique technical expertise in the acquisition target may be a cheap, swift way to achieve market penetration for Lenovo.

We also know that Palm's successes haven't quite been enough to keep the wolf from the door, and the company may be in an unsustainable business mode. Recently Palm's head of software left the company, and Palm made financial maneuvers to try to retain other senior execs...which could be either desperation, or part of background preps for acquisition. Factor in the channels to design and large-scale manufacturing that Lenovo would bring to future "Palm" smartphones or possibly even tablet PCs running a variant of webOS, and the story sounds even better.

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