HP Buys Palm for $1.2 Billion and live concerns

After months of speculation, smartphone maker Palm has finally found a buyer. HP has said it will buy Palm for approximately  $1.2 billion.
The move will give HP a foothold in the fast-growing smartphone business, at a time when HP rival Dell has its own smartphone available on AT&T.
Palm’s chairman and CEO, Jon Rubinstein, a former Apple executive, will remain with the company, says HP.
Over the last two years, Palm has tried to reinvent itself by introducing a new smartphone operating system called webOS and new phones such as the Palm Pre and the Pixi. The phones have been well-received, with positive reviews, especially for the latest versions, the Palm Pre Plus and Pixi Plus.
But Palm has been stymied by lack of a big marketing budget, particularly when compared to its rivals such as Apple, Motorola and HTC. Palm has been steadily losing money and market share. And acquisition rumors have been rampant with companies such as HTC and Lenovo reportedly interested in Palm.
Now that HP has bagged Palm, it could mean a new direction for the latter. Access to HP’s distribution channel and coffers could help turn the tide for Palm.
That’s especially true for the enterprise channel — computers and smartphones for business users — where both Palm and HP have historically been strong. This might ensure Palm a healthy future as the corporate sidearm of choice, even if it fails to gain significant consumer traction.
“HP’s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS,”  said Jon Rubinstein, chairman and chief executive officer of Palm in a statement.
HP and Palm are expected to close the transaction in the third quarter.

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