HP eyes smartphone market with Palm WebOS
The most important part of HP’s acquisition of Palm for $1.2 billion is the ownership of Palm’s device software platform, WebOS, and the engineers used to develop it. Palm’s webOS platform, which competes with other smartphone platform including Microsoft’s Windows Phone, Symbian, Google’s Android, RIM’s Blackberry, will enhance HP’s ability to participate more aggressively in the fast-growing, highly profitable smartphone market.
WebOS, which powers 3G phones such as Palm Pre, Palm Pre Plus, Palm Pixi and Palm Pixi Plus, is a good technology building block for HP to start building out its own managed device platform. This is reflected by Todd Bradley, EVP, Personal Systems Group, HP comment "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, and Palm possesses significant IP assets and has a highly skilled team."
However, there are still a number of essential pieces missing which HP will need to address. To begin with, HP needs to breathe some life into the WebOS developer community. This will be a significant challenge as Ovum’s recent survey of mobile application developers shows, application writers show an overwhelming desire to support three or perhaps four device platforms. With at least that many already dominating the space, HP needs to demonstrate the revenue earning potential of WebOS devices to developers.
In addition HP needs to bring compelling, and possibly unique, content to Palm devices. It needs to establish the commercial partnerships with content owners but also needs to ensure that billing and settlement infrastructure are built into the WebOS platform.
Although the Palm brand is not as strong as others in the smartphone market (e.g. Apple, Nokia, Google) it is an established brand and will help HP differentiate from other computer manufacturers such as Dell and Lenovo, as it seeks to become a major player.
As Bradley says "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,"
Although HP faces challenges in turning Palm around it does bring with it some key advantages from its existing business. First HP brings considerable scale to the operation and its expertise in manufacturing, which will bring efficiencies to Palm’s business. Second it has considerable global distribution networks, although key will be the operator channel, which will assist in getting Palm’s products into the hands of consumers. Third it has sufficient financial strength to invest in Palm without demanding immediate profitability from the business.
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