I've often discussed in this space, the ongoing battle among the technology titans--that constant struggle to find the missing link to control the computing world. This week, HP made its move when it purchased Palm for $1.2 billion . On first blush, it looks like an incredibly stupid step, overpaying for a company nobody wanted and that was teetering on the edge of bankruptcy. Yet some technology analysts see this as a very shrewd move on HP's part, one that gives it its own mobile operating system and entree into the lucrative and growing mobile market.
Make no mistake though, this is all about getting the best of Microsoft, Google and Apple. And with this purchase, HP gave notice it was grabbing a place at the mobile table. But their ticket was a washed out brand with little or no market share. What's more, the other players are far ahead of HP. It's difficult for me to see how HP dollars can magically transform Palm into a silk purse, but they have paid the money and they believe they can make it work.
It's Going To take a Huge Investment
Some writers like analyst Michael Gartenberg believe that HP can give Palm what it's been lacking, namely money and manufacturing scale, but the billion dollar question is whether HP can throw enough money at this deal to ever make it work? Analyst Adam Leach from Ovum says there are certainly no guarantees that the HP-Palm marriage will be a successful one.
"To compete with Google, Apple and Microsoft; HP will have to invest heavily in both the Palm brand, new products and crucially into WebOS." He adds, "WebOS needs to provide functional parity with its software competitors in order for HP to be successful. Specifically, HP needs to transform Palm into a global consumer brand, build compelling content partnerships and rebuild Palm’s once vibrant third party developer community." That is a might tall order for any organization, especially when Apple, Google, Microsoft (and others) have a huge head start in the market.
It's Going to Take a Ton of Work
Most observers believe that merging the two companies will go smoothly, but even if it does proceed harmoniously, it remains to be seen if HP can build a rich set of products that capture the imagination of consumers and do it quickly. Leach says it's going to be a challenge. "It is not completely out of the question that HP can make a success of this, but it does represent a significant challenge in what is a very crowded market place." Leach says there is one thing in HP's favor here though: the fickleness of the mobile market.
"Fortunes can change quickly in the mobile market. While a lot of HP's competitors are relying on software from other vendors, HP at least has the opportunity to differentiate its products," Leach said. This means they can build a product free of Apple's, Google's or (especially) Microsoft's operating system.
On the face of it, finding a way to free itself of its dependence on its rivals is a great move, but HP had to go with a soft brand to make this happen. It seems unlikely to me that it can leapfrog its competitors with Palm technology. Unfortunately for HP, it made this move a day late and dollar short.
Photo by perry_marco on Flickr. Used under Creative Commons License.
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