Last Updated Apr 28, 2010 6:24 PM EDT
As I first noted in February, acquisition seemed to be Palm's only hope. Only earlier this month I thought even that might be impossible because of the security problems in webOS. Who would want an operating system that needed quick and intense fixing and patching? Clearly not one of the existing handset vendors.
Enter HP: a company with an historic interest in mobile computing, tons of technical know-how, knowledge of design, a massive distribution infrastructure, lots of money, a strong brand, established relationships with both corporate technology buyers and consumers, and a marketing budget to push new products. It's one of the few companies that could buy Palm and pull off a resuscitation of webOS into a viable phone that people and carriers might actually want.
And that's exactly what will roil the smartphone waters. Now Microsoft, RIM, Apple, and Google must all deal with a new entry: webOS backed by a firm with the money, time, and management expertise to make competitive products. This must be particularly worrying for Microsoft because, for the first time, the major customer will deliver personal computers without needing its operating systems. In fact, HP has just made itself a competitor.
There's also bad news for Google, because, when asked by a Citi Group analyst about Android, HP executive vice president Todd Bradley talked of creating a new experience and then reiterated the company's plan to keep doing business with Microsoft. Sounds like Google should forget about HP as a potential customer for Android or Chrome OS.
Neither Apple nor RIM should rest easy. Bradley called the acquisition "a transformational deal in the connected mobility market" and one that can help fuel growth. It sees the smartphone market as currently over $100 billion in size and growing 20 percent annually, and one that plays well with another big interest: cloud computing. HP wants the money on the table; it expects to "invest heavily in product development" and put forth the money and effort to sell effectively. Furthermore, HP plans to extend webOS to "other" devices -- read that as tablets, netbooks, and maybe even lightweight laptops, which is a real problem for Microsoft, Apple, and Google.
The big question mark is that Palm's CEO Jon Rubinstein is slated to stay with the company. Given how badly he managed Palm, that is no plus. Then again, it may be part of a deal allowing a transition to let Rubinstein gracefully exit the mess. In any case, this is going to be interesting to watch.