The Palm-HP deal

The symbiosis of HP's and smart phone maker Palm Inc. for $1.2 billion has added another chapter in the mergers and acquisitions story. The combination of global scale and financial strength of HP and with Palm's unparalleled webOS platform. HP's has given a strong message about its participation in the fast-growing, highly profitable smart phone market. Palm's unique webOS will allow HP to take advantage of features such as true multitasking and always up-to-date information sharing across applications.

Todd Bradley, executive vice president, Personal Systems Group, HP,“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.”

He added, "Palm possesses significant IP assets and has a highly skilled team. The smart phone 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.”

The acquisition has also given a new meaning to the the growth of the Palm which is struggling . For HP, it will be a strong stride into the fast growing smart phone market. The deal, as predicted by IDC, will help in positioning HP as a player that can leverage its enormous scale in hardware in mobile devices. and also to have a platform play that includes an OS to succeed.

However, the challenges are to counter the growing popularity of Android and also to expand the geographical print of HP as Palm, despite few deals Palm has no presence outside US.

Under the terms of the merger agreement, Palm stockholders will receive $5.70 in cash for each share of Palm common stock that they hold at the closing of the merger. The merger consideration takes into account the updated guidance and other financial information being released by Palm this afternoon. The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of Palm's stockholders. The transaction is expected to close during HP's third fiscal quarter ending July 31, 2010.

Mohammad Saif, Deputy Director — Consulting, ICT Practice, Frost & Sullivan, South Asia & Middle East said, ""We believe that the next compelling market segment in IT industry would be Mobile space, acquisition of Palm by HP just reinforces this phenomena."

The crux of the deal stands in acquiring WebOS as its Web 2.0 compliant and enables end-users to have a seamless multitasking experience since it's capable of integrating various sources of information into one. WebOS also uses web technologies like HTML 5, Javascript and CSS hence it saves the pain for developers to learn a new language. This acquisition augers well for HP as it has given them a neat package which positions them equal to the leaders if not two notches ahead in the ever growing mobile market.

The deal also has added another angle between the relationship of HP and Microsoft. HP has developed its own user interface technology for desktops and laptops that run Windows, in a bid to make computers easier for consumers to navigate. Now it's poised to pursue its own direction in the smart phone and tablet markets at a time when Microsoft is trying to gain share in the growing categories.

Apple and Google had also dueled over acquiring fast-growing mobile advertising network operator AdMob, which had only recently turned cash flow positive.

archanasi@cybermedia.co.in