Palm’s spiral around the drain continues. It’s sad, really, given how wonderful their first products were. I had a Palm Pilot Pro, which I upgraded to a Palm V. I also had a couple of Treo’s, a Palm Tungsten C and a Lifedrive. All served their purposes well (although the one Treo provided through an employer used Windows Mobile, and it wasn’t terribly impressive). Things looked promising for Palm when the Pre was introduced. But the oddball ad campaign, the lack of apps and supposed reliability problems all seem to have contributed to a less-than-stellar sales and adoption rate.
One of the scenarios that the pundits are discussing is Palm as an acquisition target. The question is, though, who would want to buy them. The buyer would depend on the scenario. I see 4 different motivations for buying Palm:
- An existing smartphone manufacturer figures its cheaper and faster to remove them as a competitor.
- An existing smartphone manufacturer needs to boost their current product line, and wants to build on WebOS and other technologies in the Palm portfolio.
- A company that isn’t in the smartphone business wants to get in, and Palm could jumpstart that for them.
- A private equity firm wants to buy it, strip it and flip it.
There is a sort of variant on #1, where an existing manufacturer wants to kill two birds with one stone: get Palm’s technology and remove them as a competitor. In this case, though, I see the primary motivation being removing a competitor. Getting the technology is an added bonus to the deal. The same could be said of #2, but again the primary motivation in that case is the technology. Removing a competitor is a happy side effect.
Removing As A Competitor
The obvious candidates for this are Apple, RIM, Nokia or Google. Other companies like HTC, Motorola, Samsung and Sony/Ericsson could, but that could indicate they are trying to strike out on their own, moving away from Android or Windows Mobile. That is certainly possible, but I think it would be a significant gamble at this stage.
Of the 4 most likely companies, Google is probably the prime candidate. I don’t see Apple or RIM doing this, simply because they are most likely confident enough in their own products that they expect Palm to simply wither and die on its own. Google, however, likes to buy companies (their acquisition list is truly impressive), and they do seem to buy plenty of companies, and then not do anything with them. They could pick up Palm for a low, low price, and work to migrate the modest Palm user base to an Android phone, most likely the Nexus One.
According to a Bloomberg article, HTC is rumoured to be the leading candidate. I’m not sure what HTC gains from this, given that they already have a reasonable hardware family, and they currently have 2 operating systems they support (Android and Windows Mobile). I don’t see how adding a 3rd system makes sense. It might make sense if HTC is looking to move away from Android and Windows Mobile and strike out on their own.
Boost Existing Product
I think the strongest candidate in this one is Nokia. Their product has been losing ground to iPhone, Blackberry and Android. Symbian hasn’t really grabbed the mindshare that the other 3 have, and Nokia will need to do something to stay the big dog for a little while. Personally, I think that buying Palm and using WebOS as the base for a new Symbian would only forestall the inevitable, but at least it might keep Nokia competitive and allow the smartphone market to be a 4-horse race (I’m not convinced Windows Mobile will recover, leaving the market divided between Symbian, iPhone, Blackberry and Android). There is a real risk that Symbian could eventually go the way of Windows Mobile: once a dominant force, but no longer.
Microsoft has just released Windows Mobile 7 Series, so I really don’t see them trying to incorporate WebOS into it. It’s too soon. Dell’s mobile platform is too new, so there’s no real need to boost it either. None of the other major players need a technology boost right now.
A New Entrant To the Market
This one is trickier, because sometimes there are companies that are looking to change or branch out, but you don’t expect them to. A long-shot here would be someone like IBM, Lenovo, HP or Asus. HP has a history of building PDA’s, and could want to get into the smart phone market to fill out their nascent mobile platform suite (currently consisting of netbooks and a rumored tablet). Asus has been building a variety of netbooks, and this could get them deeper into the mobile computing space as well. This could be a play for IBM to expand their enterprise reach, by putting enterprise access in someone’s pocket.
A way-out-in-left-field possibility is Oracle. Buying Sun indicates that Oracle would like to branch out a bit, and getting a piece of the mobile space might help expand their portfolio and possibilities. The WebOS would also seem to fit with Oracle’s desire to have devices and services run off of a large, cloud-like back end.
Buy It, Strip It, Flip It
This last one is more about delaying another company from achieving one of the previous 3 goals. There are any number of private equity or other firms that might look at the Palm assets and decide they are worth more individually than they are as a single, whole company. I could see companies that fit into one of the first two categories deciding to wait to see if someone comes in just to break up Palm. In this way, someone looking to get some of the Palm technology could just pick off the pieces they want, without having to buy the whole thing (and try to integrate/assimilate the entire company).
Can Palm Be Salvaged?
Of course, I would expect Palm supporters to ask why a 5th item wasn’t on the list: saving Palm. I’m just not sure that is a viable outcome. There are too many other players with better marketshare and deeper pockets. Palm’s recovery started in a promising fashion. They are hampered by a few factors. They are caught by the fact that app developers only have some much time and so many dollars. Developers are going to target their resources at the platforms that give them the best probability of decent sales, and Palm’s user base is just too small and isn’t growing fast enough. The WebOS technology doesn’t really have an “ecosystem” around it. The iPhone, Blackberry and Android phones all come with a larger environment (particularly the iPhone) and one or more compelling features that, once a person has them, are unlikely to abandon.
To truly succeed, Palm would need to spend an enormous amount of money (that it doesn’t have), and even that would be a long-shot bet. The smartphone market is still maturing, but the key players have jumped out to an early lead. One former heavyweight (Windows Mobile) has largely been marginalized, and pushed aside quite quickly. The barrier to the smartphone market has been raised quite high, and I don’t see Palm having the wherewithal to get over it.