HP with Palm Reshapes Mobile Landscape

About 10 days ago, I broke down and bought a Palm Pre Plus for a mere $49. The few people I've told have given me blank stares. I love the gesture-based interface and the way the device works. An added bonus was the free mobile hotspot built into the device that I can use to connect my netbook while on the road. I've been reluctant to reveal my purchase because I have 20 days left to return it to Verizon should I conclude it's a dud.

While I have been on the fence, HP announced yesterday that it has agreed to acquire Palm Inc. for $1.2 billion. This leaves me thinking Palm's webOS has a much brighter future. Here's why: The biggest knock against webOS and the Pre is its lack of apps. That has been the source of my dilemma -- not the device itself.

Only 2,000 are in Palm's App Catalog compared to 200,000 or more in Apple's iTunes App Store. Making matters worse, sales of Palm-based devices are nimble, in part because developers have taken a pass on webOS in favor of Apple's iPhone and Google's Android platform.

IDC said in a research note yesterday that it believes Google's Android platform will be number two behind Nokia's Symbian platform. As everyone knows, Apple iPhones and iPads are selling like hotcakes. Then there's the BlackBerry brand and devices based on Microsoft's Windows Mobile coming out this fall.

So where does that leave Palm and webOS? Until HP came to the rescue, the future was looking bleak, despite what I think is a superior platform and user interface to Android and BlackBerry. Windows Phone 7 is a dark horse with a lot of potential, but the jury is still out. If I end up disappointed with my Palm Pre, I wouldn't rule out settling with a Windows Phone 7 or an iPhone, as an alternative. But I have no intention of leaving Verizon and neither are an alternative at this time.

The good news for webOS is that HP plans to invest significantly in both sales and marketing as well as in its developer eco system, said Tom Bradley, executive vice president of HP's personal systems group, speaking on a call to investors that was webcast. Bradley also sees extending webOS to other form factors and using its vast channel and retail presence to reach customers -- both enterprise and consumers.

"Our breadth of products between smart phones, slate and potentially netbooks represents an enormous opportunity for our customers," he said. While he declined to elaborate, the Web site CrunchGear posted five devices it envisions HP developing with webOS.

Bradley also is well aware he needs to get developers as excited about webOS as they are about Android and the iPhone, and indicated he's up for the challenge. "We believe this is a very, very early stage market. I think the developer community will very aggressively, as we invest and provide support, begin to develop that suite of applications for webOS that will make it even more compelling than it is today," Bradley said.

Indeed, HP has the means to quickly give a boost to the webOS developer eco system, said Jeffrey McManus, CEO of Platform Associates, in a brief e-mail exchange. McManus, who has given talks in the past on how to develop apps for the iPhone, was among the first to purchase the Pre when it came out last year.

"I'm confident that HP will be a great steward of Palm's webOS platform, which is still the most compelling mobile platform in existence today, particularly from a developer perspective," McManus said.  "It gives developers the ability to build native mobile applications using the same tools and technologies they already use to build ordinary Web sites today (HTML, CSS and Javascript). And WebOS will become even more compelling as HP brings it to more devices, including the Slate (which I'd expect them to do fairly soon)."

Still, IDC and others say the move could strain HP's relationship with Microsoft, whose CEO Steve Ballmer showcased HP's forthcoming Windows 7-based Slate tablet device at the Consumer Electronics Show in January. It also suggests HP's move into the smart phone market will come at the expense of Windows Phone 7, though Bradley was coy as to whether it will have a multi-platform smart phone and tablet strategy -- or emphasis.

Let's not forget that Bradley's successor at Palm, Ed Colligan, licensed Windows Mobile for the Palm Treo, in a widely publicized event with Microsoft chairman Bill Gates. It represented the first non-PalmOS-based platform the company added and, at the time, a key vehicle for Windows Mobile (in 2005 the Treo was the only major smart phone on the market besides the BlackBerry). That had mixed results for both companies, and I guess we'll find out how Bradley might handle Windows Phone 7.

Bradley insisted HP will continue to work closely with Microsoft. "We clearly believe in choice," he said. "We intend to continue to be a strategic partner for Microsoft, they are a huge piece of our business today and will continue to be so."

Still, there are reasons to be skeptical. As analyst Rob Enderle pointed out in a blog posting, HP has a history of missteps in the mobile market. "Palm and HP have both made runs at matching Apple in the past, and fallen flat on their faces," Enderle noted. "But the two companies’ combined resources might be just the secret sauce needed to stand tall beside Cupertino’s Goliath."

Michael Gartenberg, an analyst at Altimeter Group, agreed. "HP is now a force to be reckoned with in the mobile space," Gartenberg said in a blog post. "The combination of Palm technology and brand combined with HP resources and channel partners will be a strong combination for HP to drive their mobile efforts forward."

Having bought my first 3Com PalmPilot 3x in 1999 and a longtime user of the Treo, it bares noting that what's left of Palm is the company's name and heritage. The Palm Pre and webOS are very different platforms, but in my opinion, it is the only platform that currently rivals the iPhone and Droid.

A year ago I asked: Will Palm Get its 'MoJo' Back with webOS and Pre? Things certainly went down a different path than the company and many of its investors and supporters had envisioned and hoped.

With HP agreeing to acquire Palm (and let's not forget the deal could fall through, or another suitor could come along with a better bid), I agree with McManus. The future of webOS is looking brighter. But the question remains: will HP get its mojo back in the mobile market? It's too early to say but as I pointed out yesterday, it is quite ironic that Palm will once again be reunited with its former CEO Bradley, with 3Com and will be under the same roof as the once iconic iPaq. Presuming Jon Rubenstein, the key developer of the Apple iPod, and his team stick around, some interesting things can happen.

I still haven't decided whether I will keep my Pre but I am more inclined to hold onto it than I was yesterday at this time. What's your take on HP's move? If you're a developer, are you more inclined to look at webOS? Should I keep or return my Palm Pre? Drop me a line at [email protected].

Posted by Jeffrey Schwartz on April 29, 2010