Google and Microsoft Need to Worry About Who Didn't Acquire Palm
HP (HPQ) will acquire Palm (PALM), but there were four other suitors that lost out. That should make both Google (GOOG) and Microsoft (MSFT) nervous, because it shows just how precarious their mobile futures might be.
Larry Dignan, on our sister site, ZDNet, used Palm's proxy statement to uncover the dynamics of the bidding process. Five companies expressed varying interest:
The one common thread with all of these suitors? They wanted intellectual property transactions and many of the potential buyers were as interested in a licensing arrangement for things like the WebOS.According to previous rumors, both HTC and Lenovo had interest in acquiring Palm. With HP accounted for, that leaves at least two unknown bidders (and possibly more if either Lenovo or HTC wasn't among the listed group).
I had thought that the major security flaws in webOS would nix an acquisition of the company, but clearly the chance of obtaining the intellectual property was more compelling. That alone is interesting, because it shows that a number of companies big enough to undertake a major acquisition want an alternate mobile OS.
Microsoft and Google should be concerned. Both offer high profile mobile operating systems. And yet, with the webOS technical flaws and business weaknesses, Palm represented a desirable choice. That fact suggests that some existing or potential licensees currently chafe at the bit.
HP could license webOS and begin to undercut both of the companies. There are also other alternatives, like the joint project of Intel (INTC) and Nokia (NOK) called MeeGo, which will power some of the handset vendor's high end models in the future.
The mobile future was looking likely to be some mix of iPhone, BlackBerry, Android, and Windows Phone 7, but that isn't so clear now, if hardware companies actively seek alternatives to two of those products. Of the group, only Apple and RIM (RIMM) make their own hardware, and so have some security of demand. Google and Microsoft depend on how friendly their business partners remain. The Palm acquisition reminds us all that "best friends forever" isn't a business concept.
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