HP's Palm Reading...

Its 2010 and HP acquires Palm. Unless you were sitting in a well for the last one year, its impossible not to see the direction computing industry is taking now. HP, which pretty much nailed Dell in the last few years is getting aggressive about the much hyped smartphones market. As we shift from laptops to smartphones, there are just a few companies that are going to take advantage of this shift, with Apple, RIM and Google being at the top. Not one to be left behind, HP wants a share of this market. With more than 200 million smartphones being forecasted for shipping in 2010, it a market hard to ignore. And HP has $12 billion cash and spending about 10% of it on Palm, isn't too bad right? Wrong.

Palm makes phones that run Palm OS, WebOS and Windows Mobile. I remember Palm very fondly from my salad days at the start of this decade. My colleagues boasted the Palm Pilots in their cool leather pouches and I was pretty envious of its sex appeal, then. But the cooler guys amongst us, wore the even sexier Treo, made by Handspring and later acquired by Palm. At around the same time, the dorks used to carry iPaqs, made by Compaq (acquired by HP, our protagonist in this story). iPaqs were pioneers, in the sense that they were some of the first smart devices (no phone though). But after HP's acquisition, iPaq instead of being promoted as a telecom smart device (What RIM did to those berries) was left to its own fate (Back then, HP had its own management problems, remember the board troubles with Carly Fiorina?) and as a result died a premature death. Also, iPaq's ran on Windows O/S and hence they were very lethargic (Guess Windows could use some Coffee). At this time, Apple and RIM were pushing the envelop. So cut to late 2006, RIM, which successfully married telecom and computing into its berries became a leader and in 2007, when iPhone was launched, for the first time people started having orgasms at phones. My question is, what was Palm doing these 4-6 years? It was launching product after product that failed to capture either the market or the consumer's imagination. So it started developing its own O/S, the Web O/S. Not to be left behind in smartphones, HP looks around and find the also-ran Palm and pays a whopping $1.2 billion of it, reflecting about 25% premium over Palm's stock price in April 2010. For what? I will tell you for what. For a few products that HP thinks can take on RIMs, Apples and hot new Androids of the world. But this observer feels that history will repeat. Because:

- Palm is an also-ran in the emerging smartphones market much behind RIM, Apple, Microsoft and now, Android. It has no momentum in sales, no single product that the consumer will salivate after, and its market share is reducing as I type (mostly at the expense of Google's Droid).
- The key word in smartphones is community. Apple has one, Google has one, RIM has one and Palm comes with a negligible community (around 2000 or so developers). The maximum impact a smartphone will have is not on the user but through the developer. With so many apps being created everyday for Apple, Droid and RIM, there are not many out there doing the same for Palm. So, HP does not even get a large installed base of developers.
- As the netbooks market is going to take off, and with the impact of the iPad, HP will want to focus more on this market than on the smartphone market. It will be confused to focus on both these market what with the O/S decisions (Palm comes with Web O/S, but HP is a big supported of Windows Mobile, and I bet you cant have these two coexisting in peace, what will developers focus on?), hardware design decisions, app decisions to be made on a daily basis.
- Finally, lets remember iPaq for a moment. I wonder if Palm would take a similar fate or baffle us all by making HP a leader in the smartphone market, which I doubt.

I am sure HP has its reasons but are they worth $1.2 billion for a company that the world has mostly forgotten?

Flash in the pan?

Jobs rips Flash apart here, interesting comments:

http://www.apple.com/hotnews/thoughts-on-flash/