The rumor mill has it that Palm is shopping itself around. Bloomberg says they are working with investment bankers like Goldman Sachs and Qatalyst Partners, and that HTC or Lenovo might be possible acquirers. Perhaps, but I don’t think HTC would want them at this point. What does Palm bring to the table that HTC doesn’t have? Palm has limited channels (carriers), limited international presence outside of North America, a diminishing customer base, and has lost most of its momentum after it launched the WebOS and Pre/Pixi with lukewarm support from its carrier partners and a less than successful marketing campaign.
Other mainstream players have been tossed around in rumors as potential acquirers, including RIM and Nokia. I see either scenario as highly unlikely, as neither would have much to gain by buying Palm, whose main asset is the WebOS. Both companies need enhancement to their existing OSes, but both are well down the path to major upgrades already. However, I wouldn’t eliminate some mainland Chinese firms from the acquisition equation. A ZTE or Huawei would be a more probable acquirer and could leverage both the Palm brand and its technology for both domestic and international market expansion (they already have phone operations domestically and are trying to expand worldwide). And they have the cash. Lenovo could also be a possibility but they are heavily entrenched in the PC market and this may be a diversion, although they do offer phones in China.
There are other potential suitors, like Access or Softbank, who could take the OS and ditch the HW business altogether and then license out the OS to ODMs/OEMs, provided they could get a good enough acquisition price (Palm is probably hurting for cash right now and would likely go at an attractive price).
Other possibilities include some of the emerging companies out of India that could use the WebOS to leverage a local presence into their home market, and potentially internationally as well. Palm is poorly represented internationally, with the vast majority of its market in North America, so this could be a good way to expand its markets dramatically.
Another dark horse could be Sony Ericsson, who has been losing market share and desperately needs a high impact device. WebOS could do that. But SE is not very healthy either. But it does have some very rich parents that could potentially make the investment. I see this as unlikely.
If someone did come along and purchase Palm and made the required substantial investment, the most likely competitor to be negatively impacted would be Nokia. With Palm acquired and decent financial and marketing backing, it could impact on Nokia’s smartphone business more than any other company. I don’t think iPhone would be damaged in the short term, nor would BlackBerry. WebOS is a good, modern OS, and it could be a strong competitor to Android-based devices given a proper level of marketing investment, especially in the home markets of the acquirer.
Palm is under stress and does need help. It would be sad if Palm, an innovator and pioneer in the smart phone market, just disappears. It would be better if they were acquired. But, it’s not at all clear who might come to the rescue. My bet would be a company in the emerging BRIC countries. But it will need to happen soon.
Jack Gold is the founder and principal analyst at J.Gold Associates, an information technology analyst firm based in Northborough, Mass., covering the many aspects of business and consumer computing and emerging technologies.
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