Palm HP partnership | Taking aim at slate computing

Palm became best-known for Personal Digital Assistants, but the transition to smartphones did not go smoothly. Image from Flickr.

Despite grandfathering the concept of smartphones with personal digital assistants, Palm hasn’t been doing so well lately – so the Palm HP buyout that has been announced this week couldn’t come at a better time. This $1.2 billion pay day purchase of Palm, HP is acquiring the Palm operating system, intellectual property, and phone handset designs.

HP Palm purchase saves Palm

The HP Palm purchase could not have come at a better time for Palm. Despite receiving standing ovations and great reviews for its new operating system and web browser, Palm has been struggling. The technology behind Palm smartphones has been well-reviewed, but a combination of slow sales and frustrating design have meant that Palm’s revenues have been falling to dangerous levels. In its latest filing with the SEC, Palm even outlined this problem as “slow sales of the company’s products, which has resulted in low order volumes.”

HP Palm plans

The HP Palm purchase has been questioned by some Wall Street investors. The $1.2 billion price tag seems overvalued for a company whose stock was trading at about $1 in 2008. However, Hewlett Packard has plans for the Palm operating system. In the HP Palm purchase announcement, HP outlines its strategy as “creating a mobile ecosystem” that “leverages HP’s channel and enterprise connections.” Translation – HP may be distancing itself from being a Windows-only manufacturer and entering the phone, tablet, and mobile markets.

HP Slate to run on Palm OS?

Though HP has been a strategic partner with Microsoft for a very long time, HP may very well be using the HP Palm partnership to get a new operating system. There are doubts that Windows 7 will be “lightweight” enough for the HP Streak. The HP Streak is rumored to be released as a smartphone, slate computer, and more – so the polished Palm OS would be the perfect match. This would also release HP from Window’s regulations and release delays. It could be a very powerful partnership that has a chance to challenge Apple’s dominance.

HP Palm to merge in July

The HP Palm purchase is not yet approved by all regulatory agencies. While both boards of directors have approved the purchase, Palm stockholders and regulatory agencies still need to approve the purchase. If the HP Palm merger is approved, HP will become complete owner of Palm around July 2010.