Quick thoughts on Palm and HP

It could have been worse. A lot worse.

Many of the companies rumored to be looking at Palm would have bought it mostly for the patents or the brand, and tossed aside everything else. But I think there's a good chance that HP bought the company to keep running it. HP has a long history of activity in the mobile devices market, but hasn't had a lot of knockout success there lately, other than in notebook computers. Palm makes it a player again, or at least potentially a player.

The press release makes it sound like HP was especially interested in the software side of Palm rather than the hardware. WebOS was mentioned six times (compared to one mention of Pre), and Todd Bradley, EVP of the Personal Systems group at HP, was quoted in the press release as saying, "Palm's innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices."

Sure sounds to me like they're planning to deploy the OS across different classes of devices. And tablets were reportedly mentioned specifically in the press conference after the deal was announced.

So overall, I think Palm users and developers should feel good about the deal. Obviously, everything will depend on execution. But at least the company's not being immediately dismantled, which could easily have happened.

Here are some other thoughts on the deal:

Upside for Palm device sales. With HP's huge sales infrastructure, the Pre can move quickly into a lot of interesting places Palm couldn't easily reach -- especially corporate sales, more international markets, and more operator deals.

Ominous news for Microsoft. Between the gains for Android and the Apple-driven trend toward mobile companies owning their own platforms, the market space for Microsoft's mobile software continues to shrink. But more important than that, HP is the number one Windows vendor, and it now owns its own operating system. That's not an immediate crisis for Microsoft, but it should keep someone there awake at night.

Can the old dog HP learn new tricks? Historically, HP has been pretty close to inept in two areas that Palm knows how to run: Managing a consumer developer community, and creating a great user experience by combining hardware and software. If HP is wise, it will keep the Palm teams intact and let them gradually spread those skills to the rest of the company. On the other hand, if HP tries to "help" the Palm folks execute, it will almost certainly drown them in process and bureaucracy.

What is HP's goal in personal systems? The thing that surprises me most about the Palm purchase is that the rumor mill in Silicon Valley said HP was moving away from differentiation in PCs. The company has laid off many of the Apple refugees who had come in to help run the PC business, and the quirky advertising seems to have faded into the background. Supposedly, HP was much more interested in emulating Acer than Apple in PCs. But the Palm deal positions HP as a much more direct competitor to Apple.

Maybe HP sees mobile as a different marketplace, where investment and innovation can pay off better.

PS: I won't even get into the irony of former Palm CEO Todd Bradley now controlling the company again. Let's just say Silicon Valley is a very small place.


Flash Sheridan said...

And more irony (pointed out by a Palm^H^H^H^H HP employee): HP just completed its acquisition of 3Com, for twice the price of Palm. Bonus question for conspiracy theorists: How does Eric Benhamou fit in?

Gaz said...

Eric Benhamou wrecked havoc on both 3Com and Palm.

If he just listened to Hawkins and Dubinsky (of not licensing PalmOS, and in effect forcing Hawkins and Dubinsky to leave with Colligan to form Handspring), Palm wouldn't have had that roller-coaster ride for the past ten years.

Tam Hanna said...

I dont see why you people always blame the licensing of the palm OS - Sony and handSpring did a lot to advance the platform.

The issue was something else IMHO: stale asses. I can name some names at Palm Germany, but will not dfo so for the old days sake.

If PalmSource, palm et al had worked on getting OS5, OS6 right, ...


Gabriel said...

HP now has a very good OS, cool phones, talented folks, a very good platform to create a worthy competitor to the iPad. But what they do not have and should get busy fostering is an ecosystem. Continue giving developers great tools(the current ones are a great start); top level technical and marketing support. Then leapfrog Apple's app experience (do not just try to copy it)... it can be done.

Anonymous said...

HP is a hardware company, we know, as for IBM. The thing is - Steve and Bill agreement - All Things Digital - http://d5.allthingsd.com/20070530/d5-gates-jobs-interview/



Anonymous said...

Tam Hanna said:

"Sony and handSpring did a lot to advance the platform."

Really? Let's see now ...

In the beginning Palm got lucky - they released their famous palmpilot line of products to the applause of geeks everywhere. Palm achieved enormous sales success and mouth-watering profit margins.

It wasn't all plain sailing, of course. At times they suffered some dips in sales, essentially in line with economic conditions.

At one point, Palm tried to boost their results by licensing their software to Sony. Sony duly released a series of so-so models of palm-pilots which failed to make any inroads into Palm's market share, even though they undercut Palm on pricing.

When that didn't work, Sony decided to change their tactics. They tried a series of palm-pilots with a lot of so-called "features", or useless gizmos, depending on how you look at it. Remember that ridiculous "swivel" device? So much for advancing the platform!!!

Sony had a little more successful with this approach than before, so they kept at it - adding irrelevant things like higher resolution screens, cameras, music players, etc, - anything they could think off, in the spirit of throwing things against the wall to see what sticks.

What happened? Well, Sony took an electronic organiser (a sensationally successful one) and they tried to turn it a walkman, a camera, etc, etc. However, all they really managed to do was to create a bunch of hopeless compromises.

This second approach taken by Sony achieved a little more market share than before, but never enough to make money. They eventually decided to cut their losses.

Unfortunately, at one point, Palm saw their sales falling and at the same time Sony were crowing about their successes (which was just marketing spin actually). Erroneously putting two and two together, Palm concluded that they had to take up the challenge to produce their own compromised devices with all sorts of stupid gizmos. Remember the ridiculous slider on the Tungsten T series? That's the point that Palm really started to lose the plot. And the rest, as they say, is history.

So, all in all, Sony didn't "advance the platform" even one iota. They merely led Palm off the path and, ultimately, into the wilderness. Of course, that's exactly what they deserved once they decided to copy Sony's failed strategy.

Tam, I like your website and admire your enthusiasm for technology, but please leave the business stuff to people who have been around the block a few times.

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