HP Agrees to Buy Struggling Palm for $1.2 Billion

HP announced today that they will acquire (and presumably save) Palm, for a price of $1.2 billion. This is a pretty unexpected move--Palm had been put up for sale a few weeks ago, but HP was not one of the rumored buyers. Given that its flagship WebOS mobile operating system (appearing now on the Palm Pre and Palm Pixi) is one of only three currently available modern consumer mobile OSes (the others being Android and iPhone), the company was viewed as a slightly risky but valuable property.

The two companies most strongly rumored to be in the running to buy Palm were HTC and Lenovo--HTC may have wanted an OS it could call its own, to match with its top-of-the-line hardware, and Lenovo may have wanted Palm to kickstart its presence in the mobile market. Or they both could have been used to goose the asking price for Palm. HP never really came up; the company is a giant in the computer industry (and one of our Most Innovative Companies). They're barely a presence in the ultra-competitive (and ultra-profitable) smartphone arena, offering one phone and a business messenger, mostly to corporate clients. But they're going gung-ho into the tablet computer market. WebOS could turbo-charge those efforts. 

Palm has a long-standing tradition of mobile strength (its Palm Pilot PDAs and Palm Treo smartphones were both massive sellers and highly respected), and its WebOS phones are failing mostly due to decisions not related to the quality of the devices (arguably the decision to exclusively launch with Sprint, for one). HP definitely brings a lot of cash to the table and has the juice to push Palm devices wherever HP is sold (read: Best Buy), and it has said it will pump money into new products.

"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," HP Personal Systems Group executive vice president Todd Bradley said in a statement. "And, Palm possesses significant IP assets and has a highly skilled team."

Jon Rubenstein, who runs Palm now, will continue to control the company in the forseeable future. "We're thrilled by HP's vote of confidence in Palm's technological leadership, which delivered Palm WebOS and iconic products such as the Palm Pre. HP's longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of WebOS," Rubenstein said.

The deal is expected to fully complete in July.

Dan Nosowitz, the author of this post, can be followed on Twitter, corresponded with via email, and stalked in San Francisco (no link for that one--you'll have to do the legwork yourself).

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3 Comments

  • David Rader

    In all fairness- if palm were put up for sale, they we're asking to get "sucked up." lol... I like HP's style.

  • Major Tom

    Well isn't this a nice piece of jewelry for HP to put around its neck. I'm not surprised. It seems all old tech companies get sucked-up by HP eventually. Palm began life in US Robotics.

    Tom
    http://www.looneymaiden.com