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HP acquires Palm in US$1.2 billion acquisition

By Jeff Jedras,
April 29, 2010 10:47 AM ET - After struggling in recent years to reclaim the success it once had in pioneering the personal digital assistant market, smart phone vendor Palm (Nasdaq: PALM) has agreed to be acquired by Hewlett Packard Co. (Nasdaq: HPQ) in a deal worth US$1.2 billion.

The acquisition, which is still pending shareholder approval and is expected to close in HP's fiscal third quarter, gives HP popular Palm products such as the Pre and Pixi, as well as Palm's critically acclaimed new mobile operating system, webOS. HP sees the acquisition giving it an immediate foothold in the emerging smart phone market, and sees webOS as the foundation that will allow it to build a common connected mobile experience across devices, from smart phones to netbooks and even it's upcoming slate offering.

HP Canada executives were unavailable to discuss the acquisition. But in a conference call with press and analysts, Todd Bradley, executive vice-president of HP's personal systems group and himself a former Palm CEO, said Palm's world class technology coupled with HP's financial strength, product portfolio breadth and global scale will allow it to deliver a compelling mobile user experience across devices.

"We believe the acquisition of Palm is a trans-formative deal in the connected mobility market, opening up opportunities for further profitable growth by leveraging the unique strengths of Palm, along with the unique strengths of HP," said Bradley. "In acquiring Palm, HP dramatically accelerates the assets needed to deliver compelling, connected mobile experiences."

While the acquisition does involve hardware, HP seems most excited about webOS, which Bradley described as a very strong OS with a unique customer experience, an application store with 2,000 apps today and growing, and a strong platform for mobile cloud computing.

Bradley believes it will scale well to other devices, allowing HP to create a unique experience across connected devices.

"We anticipate that with the WebOS we'll be able to aggressively deploy an integrated platform that will allow HP to own the entire customer experience, to effectively nurture and grow the developer community, and provide a rich, valued experience for our customers," said Bradley.

HP will invest heavily in product development, and Bradley said he sees opportunity in both the consumer and enterprise segments, where key verticals such as health care and education have compelling use cases for connected mobile devices such as tablets and slates.

As for Microsoft Corp., Bradley said they'll remain a key strategic partner, but it's unclear if that means Windows Mobile will play a role in HP's mobility strategy.

At HP's Americas partner conference this week in Las Vegas, HP executives have continually been stressing the strength and breadth of HP's product portfolio to offer customers complete and integrated end-to-end solutions. Acquiring Palm strengthens that message even further said James Alexander, senior vice-president with London, Ont.-based InfoTech Research Group.

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