HP (HPQ) buys Palm (PALM) – what it means for the smartphone market

avatar By: IS
Date posted: 04.29.2010 (5:48 am) | Write a Comment  (1 Comment)

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It was well known that Palm was in financial trouble. With dwindling revenues and a very very tough market, it had very few weapons compared with Apple’s Iphone as well as the numerous phones powered by Google’s Android operating system. The US smartphone market quickly shrank from 4 major players (Google, Apple, Microsoft and Palm) to 3 and things were only getting worse for Palm. The problem of course when things are not going well financially is that suddenly your partners become less interested in doing business with you. That happened for Palm as it saw partners such as Verizon or resellers like Radio Shack threaten and in some cases stop selling the Palm phones.

I would expect such to more or less stop happening now that HP is behind the smartphone maker. HP does have power and a solid reputation which should be enough to both give confidence to Palm’s partners but also put some fear of having the major Sillicon Valley company as an enemy.

But the phone does not change

TechCrunch has reported that HP intends on keeping the WebOS operating system, seen by many as the biggest asset on Palm phones. That is good but it will also put much pressure on HP to come up with a strategy to compete with Apple and Google. In both cases, the major advantage seems to be in the applications available to those who use the system. While the number of apps available can be intimidating, the overall quality of apps available on Android and the Iphone is just beyond anything Palm can rival right now. And that will not change anytime soon unfortunately for Palm & HP,

Why it won’t change….

Since the apps are not driven by the companies but rather by private developers and companies, the environment needs to be attractive for them to work on your platform. And an environment that has a small and decreasing number of users is far from being attractive. Why work on an application for Palm when a successful app on Apple will generate 10 or 20 x the revenues. The competition is more fierce of course but in general that does not scare the best developers. Which means that those working on Palm apps are not the best, which in the end translates into an inferior user experience.

Is there anything to be done?

It is not game over yet. Google has proved how quickly it was possible to enter the market and in my opinion, it is all about giving incentives for developers. This could be done with major contests, offering cash prizes for the best applications or most downloaded apps, etc, etc. There are many possible ideas but I certainly think that Palm has more of a chance with HP backing it than it had on its own. It did not have the money or time to dedicate to a battle with Apple, Google & Microsoft. Now it does….

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1 Comment »

  1. Pingback by Finanical Ramblings — May 2, 2010 @ 6:26 am
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    [...] HP buys Palm @ Intelligent Speculator. What will happen to the Palm? I thought it was dead… can it come back in the smartphone industry? [...]

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