HP sources new kit in Palm-off

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Hewlett Packard’s (HP) purchase of troubled smartphone manufacturer Palm will give it the firepower to start to compete with the likes of Apple and Research In Motion (RIM) in the connected devices space, according to top industry analysts.

Palm was bought by IT manufacturer HP last month for $1.2 billion (£788 million), effectively signalling its intent to make more aggressive moves into the smartphone market with Palm’s webOS platform, currently seen on its Pre devices, being the main driver behind this strategy.

HP also claimed that its global scale and financial strength, together with webOS, would help it achieve this goal, with the operating system enabling it to take advantage of features such as true multi-tasking and continually up-to-date information sharing across applications.

Analysts suggest the sale of the company makes perfect sense for Palm and that it signifies a bold move from HP as it has not decided to join the likes of HTC, Samsung, Sony Ericsson and Motorola in rolling out Android devices.

CSS Insight director Ben Wood says: “Palm knew it couldn’t invest as much as it would have liked to make a real impact in the market and it was no secret it needed help doing this as it was reaching the end of the road with the resources it had.

“It’s a bold move for HP and its intentions to make a real impact in the mobile market are now clear. It hasn’t jumped on the Android bandwagon – it wants to build a software platform and create an end-to-end solution in a way that Apple and RIM are doing. How can a company like HP ignore a market that sells 1.2 billion units each year?”

Gartner research vice president Carolina Milanesi says: “Palm was lacking in geographical presence and the number of devices it could bring to market. HP is showing a willingness to change its business strategy in looking at a more vertical approach, not just for smartphones but also for connected devices and also going after the Apple-type deal where it owns the hardware and will try to build an ecosystem around that.

“That is easier said than done nowadays but this is now proving a winning formula in the mobility space. HP is putting a lot of distance between itself and Android. Going out with a differentiated operating system will help it avoid being forgotten as one of the many on the Android bandwagon.”

Ovum principle analyst Adam Leech agrees with Wood and Milanesi, adding that HP was always going to struggle to make a breakthrough in the smartphone and connected devices market without spending a large amount of money on a manufacturer that already has some presence.

“If HP is looking to go up against Apple and Android then this purchase was essential. It would be very unlikely for HP to be able to enter the market from scratch. It’s a congested market as it is and I can’t think of any brand that could be successful going into this market from ground zero.”

Full article in Mobile News issue 473 (May 10, 2010).

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