HP pins smartphone future on ailing Palm brand

Joseph Galante and Rochelle Garner
30 Apr 2010
00:00

Better together

Still, Palm and Hewlett-Packard may do better together than they did separately, Liu said. Hewlett-Packard had resources and the wrong product, while Palm lacked financial backing, he said.

“It’s two wrongs trying to make a right,” said Liu, who’s based in San Francisco. “They both under-delivered.”

Palm put itself up for sale, people familiar with the matter said earlier this month, after a partnership in January to sell phones through Verizon Wireless failed to boost growth as much as analysts estimated. Taiwan’s HTC Corp. and China’s Lenovo Group Ltd. looked at the company, people familiar with the matter said at the time. Dell Inc. also looked at Palm and decided against making an offer, the people said.

Analysts including Kaufman Bros.’s Shaw Wu have also named Nokia Oyj, the world’s largest mobile-phone maker, as a potential bidder. Nokia isn’t planning to compete for Palm, according to a person with knowledge of the company’s plans. Nokia spokeswoman Laurie Armstrong declined to comment.

If the acquisition by Hewlett-Packard falls through, Palm may be required to pay it $33 million, according to a regulatory filing from the computer maker.

‘Much-needed marketing’

Buying Palm is likely to save Hewlett-Packard money trying to develop an operating system and will shorten how long it takes to bring new phones to market, said Jack Gold, founder of J.Gold Associates, an information-technology firm. Hewlett- Packard’s current lineup of iPaq phones run Microsoft Corp.’s Windows Mobile operating system.

“H-P’s Windows Mobile phone business is dying a rapid death and H-P would have had to totally revamp its product line in order to stay in the smartphone business,” said Gold, who’s based in Northborough, Massachusetts. Palm has “a compelling OS, but their marketing has been weak. H-P has a great ability to fund the much needed marketing Palm needs to get noticed.”

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