Smartphone market gets an old new player as HP buys Palm
The smartphone market was given a massive boost today as the news broke that HP will acquire smartphone pioneer Palm and perhaps most significantly, the Palm webOS mobile operating system. HP's international infrastructure, fiscal strength and influence will ensure Palm now has not only a future, but will now become an even more serious competitor to Apple, Google's Android, RIM, Microsoft et al in US$100 billion smartphone and connected mobile device marketplace.
HP's offerings in the mobile space, the iPaq smartphones based on Windows Mobile OS, have been solid but lack in comparison to the focused mobile innovation of the above-mentioned competitors. As Palm’s Todd Bradley points out in the press release below, the Palm webOS mobile operating system "provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices.”
It will now be interesting to see if the HP Windows-tablet rumoured a few weeks back sees the light of day. Our guess is NO, it won't.
And let's all breathe a sigh of relief. If HP hadn't picked up Palm, it might have become history and it deserves better. Now its presence and funding will reinvigorate this exciting mobile marketplace.
The press release announcing the purchase reads as follows:
HP to Acquire Palm for $1.2 Billion
Combination will accelerate HP’s growth within the more than $100 billion connected mobile device market
PALO ALTO and SUNNYVALE, Calif., April 28, 2010 HP and Palm, Inc. (NASDAQ: PALM) today announced that they have entered into a definitive agreement under which HP will purchase Palm, a provider of smartphones powered by the Palm webOS mobile operating system, at a price of $5.70 per share of Palm common stock in cash or an enterprise value of approximately $1.2 billion. The transaction has been approved by the HP and Palm boards of directors.
The combination of HP’s global scale and financial strength with Palm’s unparalleled webOS platform will enhance HP’s ability to participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets. Palm’s unique webOS will allow HP to take advantage of features such as true multitasking and always up-to-date information sharing across applications.
“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,” said Todd Bradley, executive vice president, Personal Systems Group, HP. “And, Palm possesses significant IP assets and has a highly skilled team. The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share. Advances in mobility are offering significant opportunities, and HP intends to be a leader in this market.”
“We’re thrilled by HP’s vote of confidence in Palm’s technological leadership, which delivered Palm webOS and iconic products such as the Palm Pre. HP’s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS,” said Jon Rubinstein, chairman and chief executive officer, Palm. ”We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.”
Under the terms of the merger agreement, Palm stockholders will receive $5.70 in cash for each share of Palm common stock that they hold at the closing of the merger. The merger consideration takes into account the updated guidance and other financial information being released by Palm this afternoon. The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of Palm’s stockholders. The transaction is expected to close during HP’s third fiscal quarter ending July 31, 2010.
Palm’s current chairman and CEO, Jon Rubinstein, is expected to remain with the company.