HP Grabs Palm, WebOS for $1.2 Billion, What's Next?

As recent as a week ago, Palm chairman and CEO Jon Rubinstein held firm that things weren't as bad as they seem, that Palm wasn't in dire need of a lifeline, and he and his company had a plan to return the struggling smartphone maker to profitability. It looks like we'll never know if that was true or not, as HP today announced it has entered into a definitive agreement to purchase Palm for about $1.2 billion. You snooze, you lose, Lenovo, HTC, and everyone else rumored to have been interested in Palm.

The big draw for HP is Palm's webOS platform, which the OEM hopes will help it participate more aggressively in the fast-growing and highly profitable smartphone and connected mobile device markets. According to HP, Palm's webOS will allow it to take advantage of key features, like multitasking and sharing up-to-date information across different applications.

"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," said Todd Bradley, executive vice president, Personal Systems Group, HP. "And, Palm possesses significant IP assets and has a highly skilled team. The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share. Advances in mobility are offering significant opportunities, and HP intends to be a leader in this market."

It will be interesting to see where HP goes from here. Obviously the OEM has some kind of plan for Palm's webOS, as well as the financial backing that Palm never had, which raises all kinds of questions and potential scenarios. Will we see a webOS enabled tablet from HP? Perhaps. How will HP attack the smartphone market, and can it compete with Google, Microsoft, RIM, and Apple? Maybe.

Whatever HP's plans are for the webOS platform, the OEM would be wise to focus on app development. According to Todd Bradley, EVP of HP's Personal Systems Group, Palm has about "2,000 applications and growing," a pittance compared to Android (50,000+) and iPhone (180,000+).

And what of Jon Rubinstein, the man who didn't necessarily think Palm needed to be sold in the first place? He's expected to stick around with the company, so perhaps we'll get to see what his plans were after all.

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