Wednesday’s announcement that HP is acquiring the struggling Palm for $1.2 billion lit up the Internet -- but what could it mean for smartphone competitors like Apple?
In an announcement Wednesday that immediately set Twitter and the tech world on fire, computer Goliath HP announced that they were acquiring smartphone legend Palm for $1.2 billion, which equates to $5.70 in cash to shareholders for each share of Palm common stock. The deal is expected to save the struggling Palm and at the same time, give HP accelerated growth in the mobile device market where they’ve fallen behind new heirs to the throne such as Apple, RIM and devices based on Google’s Android.
‘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,’ said Palm CEO (and former Apple executive) Jon Rubinstein, who is expected to remain with the company he’s helped rescue over the last two years. ‘HP’s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS. We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.’
Nearly on its deathbed, all eyes were once again on Palm a year and a half ago when they previewed their new Palm Pre handset, which debuted the slick new webOS software specifically designed for mobile devices. The handset launched to great fanfare last June, but was quickly overshadowed a week or so later with the announcement of the latest iPhone 3GS from Apple.
Despite a strong start, the Palm Pre started to flail in the market, blamed largely on its exclusive carrier deal with Sprint. By the time the device was finally launched with upgraded hardware & software as the Palm Pre Plus on Verizon Wireless (alongside its lower-priced sibling, the Pixi Plus), the damage was done -- Palm was bleeding cash and whatever early momentum they had was largely gone.
Palm’s webOS has been widely hailed as a solid competitor to Apple’s iPhone OS -- which continues an uphill climb to the top of the smartphone heap -- as well as Google’s Android, while RIM’s Blackberry and Nokia’s Symbian continue to hold their own as Microsoft prepares to reboot its own Windows Mobile OS later this year. HP’s acquisition of Palm will likely not come as good news to the competition, since it’s expected that HP will put a lot of money and resources into accelerating the growth of webOS even beyond mobile handsets -- presumably including tablets and other Internet-connected devices.
Apple will have to work harder to maintain its early lead in this race: Android is already nipping at their heels, thanks to a wide variety of handsets from multiple manufacturers and carriers. All of the mobile companies are working hard to ape the iPhone as quickly as possible, while Apple seems to be slowing its pace of innovation and concentrating more on catching up to the competition and shoring up its feature set with more profit-generating ‘features’ like iAds. For example, iPhone OS 4.0 has finally addressed multitasking, but so far it appears to do it in a less-elegant way than webOS or even Android.
Apple may also face another dilemma with the timing of its new handsets -- can it afford to introduce only one new device each year? Certainly, newer siblings to the iPhone such as the iPod touch and now the iPad contribute to closing that gap with its rivals, but even competitors such as RIM have multiple Blackberry models available at any given time, versus one current iPhone model.
We’ll certainly be watching HP’s acquisition of Palm and how it will affect Apple, so stay tuned for more developments as they happen.
(Via Mac|Life all.)