Jilted by HTC, Divvying Up Palm May Be Rubinstein’s Only Option

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Palm’s options are somewhat thin on the ground, following today’s news that HTC has lost interest in the struggling smartphone manufacturer. The firm best known for its Android handsets was thought of as the best hope for Jon Rubinstein’s struggling company, but has pulled out citing, according to a source, a lack of “synergies.” The current hookup rumor links Palm and Lenovo, but with Palm’s financial report showing sales at almost one-third lower than analysts had expected, it’s going to be a hard one for the company’s CEO to get out of.

Rubinstein has given an interview to the Financial Times in which he remained upbeat, saying that Palm was working “fast and furious” on new handsets. As for the firm’s survival, he outlined a number of options, including licensing its operating system to other handset makers. Its ability to be the only OS that truly multitasks (Android sorta does it but its apps sometimes just “pause” when you move away from them) won’t count for much when the iPhone OS4 launches this summer–although Apple’s form of multitasking isn’t quite what multitaskers take multitasking to be.

So, he’s open to a “strategic relationship or business deal” and he’s open to considering a “reasonable offer” from a third party–hence the news about Lenovo. Although not the only company said to be in the running, some analysts believe that Palm’s best hope would be to look for a buyer from mainland China, which could use Palm as a way of getting a foothold in the lucrative US smartphone market. Some commentators, however, see this as unlikely, as Lenovo’s smartphone, Lephone, has just launched in China and, if successful, will probably make its way across the Pacific some time next year.

Although the CEO claims he has “a plan that will get us to profitability,” the licensing option could just be a cunning diversion for Rubinstein’s plans. He refused to confirm that Palm may have already called in banking advisers to oversee a sell-off, which could mean that the board has already decided to split the hardware and software divisions and put them on the market as separate entities. The ace in Palm’s hand is, of course, its webOS operating system, but in a market filled with better smartphones, its hardware just doesn’t rock the socks off the general public.

Five years ago, Palm spent a great deal of time and money putting the original company back together, after its various divisions were either sold off or disbanded, and it seems that history is repeating itself. It’s a shame that it happened on Rubinstein’s watch, because he’s a seriously talented man–don’t forget, during his time at Apple, he headed up the team that brought the world the iPod. The clue to Palm’s future may just lie in its recent past.

About the author

My writing career has taken me all round the houses over the past decade and a half--from grumpy teens and hungover rock bands in the U.K., where I was born, via celebrity interviews, health, tech and fashion in Madrid and Paris, before returning to London, where I now live. For the past five years I've been writing about technology and innovation for U.S.