A lot has been already written about this subject, but here are my own quick insights.
Impacts of this deal:
- For HP: Palm & WebOS strengthen HP’s positioning in the long run, strong patent portfolio (1650 patents), operator relationships (e.g. 85+ carriers globally including Verizon, Sprint, etc.). and differentiation in the mobile devices market (HP will offer web-OS powered smartphones, tablets, notebooks, etc.). With Palm, HP is also able to leapfrog past other PC makers such as Dell, Lenovo and Acer, who are also getting their feet wet in the growing smartphone segment. In addition, it is likely that Palm also drew some interest from players such as Lenovo and HTC, and, as the old adage says, “to the winner, the spoils”.
- For Palm: HP brings a few intangibles to the table including resources, scale and global reach, while simultaneously maintaining Palm’s autonomy (Palm will be a business unit within HP). To put it in other words, HP has the “deep pockets” to invest in the Palm brand (ecosystem, hardware) and take WebOS in places that Palm couldn’t (now with HP, it might put WebOS on devices such as set top boxes, netbooks and other low-end devices, which Palm alone wouldn’t do, particularly after the Foleo debacle). Moreover, HP is likely to be able to offer a cost effective product by leveraging its existing purchasing power for items such as memory, keyboards, panels, etc.
For success, HP will need to integrate Palm, rationalize its software platforms (Linux, WinMo, Windows7 and webOS) and strengthen Palm’s enterprise offerings in order to better position itself versus competitors such as RIM. Furthermore, HP will need to invest a lot in the platform, specially in third party app development, hardware and sales channels. Recall that Palm had an uphill battle to develop a strong developer ecosystem, with only 2K apps, which is much less than Apple’s 185K apps, for instance. While HP-Palm will not likely change the smartphone market landscape in the short run, the merger indicates that mobile device leadership entails a more compelling and vertically integrated proprietary hardware/software offering, which can add some competitive pressure on vendors such as HTC, LG, Motorola, Nokia, Samsung and Sony Ericsson.