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Wednesday, April 28, 2010

Quick thoughts on Palm and HP

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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.



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