HP buys Palm for $1.2 billion

WebOS appears to be the main reason

MANY WERE DISAPPOINTED by the statement from HTC saying that it had no interest in Palm, but likely just as many were surprised at HP’s announcement that it will purchase Palm. Although HP is one of the longest running Windows Mobile supporters, it now seems like HP has found itself a custom OS to run on its handheld devices in the shape of Palm’s WebOS. The question now is what we can expect to see from HP in terms of devices running Palm’s WebOS.

HP’s Todd Bradley has already suggested during a conference call that HP is looking at making WebOS powered “smartphones, slates and potentially netbooks”. Judging by this and some of the slides that go with the conference call, it seems like HP has done some serious long-term planning based on this purchase. HP seems to think that WebOS will give it a lot of advantages over its competitors, such as a “differentiated customer experience” and a “platform for mobile cloud-based services”.

HP hasn’t exactly been a major player in the smartphone market space and has mostly focused on the business handset market with its line of iPAQ smartphones, which haven’t really proven to be hugely popular. It might have something to do with HP’s choice of handset design, or lack thereof. Add to that the decreasing popularity of Windows Mobile and HP’s purchase of Palm is making more and more sense.

In all fairness, Palm hasn’t exactly taken the world with a storm with its Pre and Pixi handsets, but the devices themselves aren’t the reason why HP bought Palm. Instead HP seems to be looking at having its own OS platform for handheld devices rather than relying on third party software and this might very well prove to be the right move for HP. Palm’s WebOS has proven to be popular with reviewers, despite the fact that Palm’s devices haven’t proven to be quite as popular with either reviewers or buyers.

However, not everyone is happy with this deal between HP and Palm, as three separate investigations against Palm for “possible breaches of fiduciary duty” have been started by various law firms on behalf of Palm’s shareholders. The common ground for the investigations is that they think that the $5.70 price per share that HP and Palm have agreed upon is not nearly close to what Palm is worth. Palm’s shares are currently trading at $4.63, but as recently as January, Palm’s share price was over $13 and back in October Palm’s shares were trading at between $15 to $17. However, it seems like the same shareholders have forgotten the fact that back in December of 2008 Palm’s shares hit a low of $1.42, and in the light of that it seems like HP isn’t under paying for Palm.S|A

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