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Jul 1 2010   10:26AM GMT

HP Now Owns Palm: I Never Thought it Would Happen

Ed Hardy Ed Hardy Profile: Ed Hardy

As of today, the once proud Palm is now a division of HP. If you’re not shocked by this, it’s probably because you haven’t been following the mobile device industry for a decade or more. To me, the headline might as well be “Microsoft Buys Apple”.

If you look back to the turn of the century. Palm and HP were bitter rivals. HP made the iPAQ line using Microsoft’s Pocket PC operating system (later renamed Windows Mobile) and Palm made handhelds with its own Palm OS.

For a long time, Palm was winning this battle. Its PDAs were cheaper and better than its rival’s were. Palm was riding high on its success, and the future looked bright. What a difference a decade makes.

Years went by and the market shifted from PDAs to phones, and for a while it looked like Palm had successfully made the transition. Around the middle of this decade, its Treo models were some of the best-selling smartphones.

But Palm fumbled. It was incapable of updating its operating system, and customers eventually got tired of buying devices that hadn’t advanced in any meaningful way in years.

In the mean time, Apple totally shook up the market with the release of the first iPhone in 2007. And Google introduced the Android OS the next year, while poor old Palm was still shipping models based on an operating system released in 2001.

In 2009, it looked like Palm had finally gotten its act together. It released the first models based on the newly-created webOS to much praise from reviewers. Unfortunately, Palm was just too late. Customers wanted iPhones and Droids, and had no interest in Palm’s Pre and Pixi. Sales were well below expectations, and the company eventually had to put itself up for sale.

In the mean time, HP hadn’t done much better. It’s iPAQ line had been a dominant player in the PDA market, but HP didn’t successfully make the jump to smartphones. The company hasn’t had a model that was an important player in years.

But the two companies’ overall situations are totally different because HP has a very profitable line of laptops, PCs, and printers, while Palm’s entire fortunes lay in its smartphones. That’s why HP can afford to buy Palm, who otherwise was headed for the junkheap.

Moving Forward
HP has made it clear that it acquired Palm to get its hands on the webOS. Todd Bradley, the head of HP’s Personal Systems Group, said “Palm’s innovative operating system provides an ideal platform to expand HP’s mobility strategy.”

The company intends to make smartphones and tablets running the webOS, but executives haven’t yet revealed any specific plans for new devices.

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