What did HP get for just over billion dollars

I was in San Jose a few weeks ago for the iDev|360 developer conference and was witness to the mainstream media taking note of Palm’s dire situation.  The San Jose Mercury News had the headline “Palm’s demise may be at hand” (section A page 1 April 13, 2010) and a story detailing how Palm’s latest smartphone offerings were “Struggling with underwhelming sales”.  It really hit home with me as 5 years prior I was in San Jose attending what was the last of the PalmSource conferences.

It’s no secret, I was a major Palm fan back in the day.  I ran the Palm OS Developer’s group for well over a year and I still have a drawer of vintage Palm OS devices.  But Palm let the glory slip from their hands and have been unable to re-catch the fire that they once had.

But with the news of HP acquiring Palm, you really have to think about what HP expects to get from the investment.  Let’s look at what HP bought.

The Palm brand

Palm has stood for mobile computing for over a decade, it is one of the most recognizable brands in the mobile space.  One could contend that the brand has been tarnished over the years but I submit there is still value in the Palm moniker.

Palm’s Intellectual Property (IP)

Palm owns over 1000 mobile patents.  As we have seen recently, mobile patents are being used by companies to protect their products and markets.

The Palm Line of Hardware

The Pre and Pixi lines of mobile phones have hit a chord with some users.  I have actually seen these devices in use by everyday people.  I say this because when I first saw these devices I was un-impressed.  I did not see the elegance of prior Palm devices in the design of this generation of devices.  Many in the industry made light of the sharp edges and overall styling.

Palm’s team

I have had the great fortune to meet several of Palm’s engineering team over the years at the PalmSource conferences.  These folks are amazing.


This is the operating system running on the Pre and Pixi smartphones that Palm has been selling.  Palm has positioned it as an environment where you can build applications using standard web technologies (meaning JavaScript).  It provides multitasking, and on one of Palm’s webpages states  “Palm webOS is designed to run on a variety of hardware with different screen sizes, resolutions and orientations, with or without keyboards and works best with a touchpanel though doesn’t require one.” (http://developer.palm.com/index.php?option=com_content&view=article&id=1761&Itemid=42)

The webOS channel

Back in the day there was something called the “Palm Economy”.  Most of us who used the term were referring to Palm, the hardware, the operating system, indie developers (Micro ISV’s for those who are coming from the Microsoft universe) and their applications and electronic distribution outlets.  The once vibrant “Palm Economy” has gone through a recession of sorts and the majority of participants have moved on to other economies.  It is obvious but I will state it here, developers are important to a platform.  Developers need a channel to sell into that actually has consumers who can and will buy their goods.  Developing such a channel is critical to the success any mobile operating system.  Consider the thought experiment, where would the iPhone and iPad be without the AppStore?  (and if you still aren’t convinced that applications matter, visit Apple’s WWDC 2010 page and examine the graphic which contains hundreds if not thousands of iPhone OS third party application icons)

So where’s the value in HP’s purchase of Palm?  The Palm brand, while it is a household term isn’t in my opinion worth the price HP paid for Palm.  I contend that HP already makes hardware so while the Pre and Pixi lines have some value to HP they aren’t what drove the sale.  Palm’s IP is a treasure trove of technology but only if you were going to be sued, in fear of being sued or you were planning on starting legal action against others and lacked a patent portfolio of your own.  Don’t get me wrong, there’s huge value here and I was betting that HTC or Google would end up buying Palm for the IP portfolio alone, it is just that I don’t see HP needing it at this point.  The human assets that Palm has while amazing could have been cherry-picked over time so I don’t see much value with regard to the team for HP in this deal.

That leaves what I believe to be the two gems that HP wanted; webOS and the distribution channel.  Why?  It is very simple, the iPhone and iPad.  At this point, Apple owns the  “mobile pie”.  Companies such as HP, Lenovo and others want a slice of the “mobile pie”.  Even more, Apple is the sole provider of the ovens that that are used to make the pies, they are the only vendors of the ingredients that can be used to make the pies and only distribution channel to sell the afore mentioned pies.  And there’s a LOT of money right now being made in the “mobile pie” arena.  (OK, I will drop the pie analogy here but hopefully you get my point)

HP is bringing phones and tablets to market which will greatly benefit from webOS and the webOS channel.  The “Slate” is one such device.  It is rumored to be running Windows 7, which is a desktop operating system.  I have put forth many times that desktop operating systems such as Windows don’t scale to mobile devices such as tablets and phones.  And frankly I wouldn’t want Mac OS X on my tablet or phone either, this isn’t about a silly anti-Microsoft religious debate.  Operating systems like iPhone OS, Android, webOS, and Windows Phone 7 (*COUGH*) scale nicely across the mobile spectrum (phone, PDA, tablet, etc.) while desktop operating systems don’t.  I don’t want to get a mobile device and then have to wait hours while it has to install system update after system update, reboot after reboot need to happen just to get the device in working order (see my tweet stream for my latest adventure with a Windows netbook for context).  Mobile devices also need an application distribution channel that allows consumers to purchase applications and for developers to sell applications, just look at what is happening with Apple’s AppStore.

In conclusion I’m very happy to hear that Palm will live on in some form.  I look forward to seeing where HP will take the webOS Economy.


%d bloggers like this: