HP shakes up mobile devices market through Palm buy

In the enterprise systems arena, Hewlett-Packard and Microsoft are allies. Faced with the combined power of Oracle and Sun, and the growing partnership of Cisco and EMC, the companies forged in January 2010 a commitment to invest $250 million in the interoperability of their cloud-based technologies.

And they are ostensibly partners in the tablet PC arena, a minor niche until the launch this year of Apple’s iPad which has ignited consumer and worker demand for portable, touchscreen PCs. HP has had a tablet PC on the market for many years, and it runs on Microsoft’s Windows operating system.

But when Hewlett-Packard agreed in April 2010 to acquire US mobile device Palm for $1.2 billion, a popular analysis was that this could mean the tablet partnership may be under question.

Palm, whose personal digital assistants (PDAs) approached iconic status during the late 1990s but have since been eclipsed by such mobile devices as the BlackBerry, suffered one of the worst financial performances in the industry during 2009.

That year had seen the company undergo a transformation, as it launched a range of smartphone devices under the Pre brand and launched an operating system for WebOS.

But while the company managed to increase revenues 286% year-on-year to $349 million during its most recent quarter, it lost $18.5 million in doing so and that performance was considered a failure by financial analysts.

HP implied that Palm’s devices were the prize it had its eyes on. “The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share,” said Todd Bradley, executive vice president of HP’s personal systems group, in a statement. “HP intends to be a leader in this market.”

But that did not prevent speculation that HP tablets might soon be available with the WebOS operating system pre-loaded. And while the giants of the IT industry are used to partnering in one field with companies they compete against in others, this could have ramifications in the cloud arena.

The increasing sophistication of mobile devices – which are always connected to a network but that have limited on-board storage capacity – is considered to be a driver for cloud-based services and dominance in one arena may prove to be an advantage in the other.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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