HP Buys Palm!

Hewlett-Packard (HP), a major player in the PC industry, stunned the mobile-phone world yesterday afternoon when the company declared that it had reached an agreement to buy Palm, Inc.; the announcement was especially shocking because most major analysts assumed that HP had little to no interest in the flailing company.

According to Palm, there was “a high level of interest from other serious buyers,”– earlier speculation suggested that RIM (the company behind the BlackBerry devices), Lenovo, Dell, and HTC were all on the table at some point. Ironically, the announcement came just days after HP finalized last year’s acquisition of Palm’s former owner and network infrastructure manufacturer, 3Com.

The Deal

HP reportedly agreed to pay a cool 1.2 billion dollars for Palm, a pittance considering that Palm was worth three times that back in October. Each shareholder will get $5.70 per share when the deal closes by July 31. Starting in August, Palm will become a division of the world’s largest seller of personal computers and will remain separate from HP’s iPAQ Windows Mobile phones. According to sources “familiar with the situation” , Jon Rubinstein and the rest of the Palm management staff are staying on with this new division.

It appears (for now at least) that the FTC is OK with the deal– however, a group of unhappy Palm stockholders is planning to file a lawsuit since they feel the price per share that HP is paying is too low.

What This Will Mean

Palm says that operations will continue as normal since they’re currently focusing on closing the deal with HP at the moment. Nothing very different is going to happen until August (at the earliest). I imagine that Palm will continue with its current schedule, meaning new hardware sometime this summer and a major webOS update in the fall. Truly major changes most likely won’t occur until 2011.

HP is buying Palm for webOS which means we can expect more and more devices powered by this operating system.

History

Palm has a history of being bought, sold, and spun off. Throughout its eighteen year history, Palm has changed hands six times! It’s also important to note that Palm and HP have a history together. In the early nineties, Palm was able to survive, despite its failed partnership with Casio, through licensing its handwriting recognition software to Apple and HP. In addition, Jon Rubinstein began his career by working at HP and the Executive Vice President of HP’s Personal Systems Group, Todd Bradley, was once the CEO of Palm. In a different light, both companies are known for their notoriously poor quality hardware. Ironically, Jon Rubinstein’s job at HP included improving quality control.

Possibilities for the Future

A major advantage of this acquisition is that Palm now has an enormous amount of cash at its disposal for R&D (research and development). Besides hopefully improving the quality of its flagship phones, Palm’s also expected to expand its lineup. The word “tablet” was repeated over and over again at yesterday’s conference– although no details were provided, HP definitely had its eye on Palm so it could integrate webOS into new tablets (watch out iPad). Also, HP is planning to expand Palm’s phone offerings to include more business-focused devices.

The famous Greek philosopher Heraclitus once said, “If you do not expect the unexpected, you will not find it; for it is hard to be sought out, and difficult.” Well put my friend– that quote basically sums up this acquisition: unexpected.

Via: Engadget