Palm’s recent launch with Verizon Wireless has failed to generate any momentum for the company, putting the company’s long-term prospects into question.
So, what can Palm (NSDQ: PALM) do? Given that its new webOS is a worthy contender and stacks up nicely against the iPhone, Android and others, it must have options. One solution could include identifying a buyer or partner for the company. Right now, it’s largely a niche player, and should be looking for a company with deep pockets, strong relationships with developers and a good distribution network.
That shouldn’t be so hard given that so many companies are looking to get a piece of the smartphone action. In fact, it’s no wonder something hasn’t happened already.
There’s three potential suitors that immediately jump to mind, and likely there’s others, too. Nokia (NYSE: NOK) and Dell have long been rumored to be potential buy-out candidates. Those are still attractive options. A third one could be HP, which despite its line of iPaq smartphones running the Windows Mobile, has been completely overshadowed.
In particular, Nokia remains a strong prospect for buying Palm, or licensing its software. At Mobile World Congress last week, it announced it was merging its Maemo operating system with Intel’s Moblin operating system to create MeeGo. Both operating systems are based on Linux, like Palm’s. In doing so, both Nokia and Intel (NSDQ: INTC) will just fall further behind, and confuse the market further. The first release of MeeGo is expected in the second quarter of this year with devices launching later in the year. In contrast, Palm’s webOS is already a fully baked product with a small, but growing ecosystem. And, while Palm has accumulated debt while trying to get off the ground, together Nokia and Intel should be able to cover it.
Another candidate is HP, which continues to say that it is serious about smartphones, even though handset sales have fallen about 80 percent over the last five years, reports the NYTimes. “We are committed to the phone space,” said Phil McKinney, the CTO in HP’s personal systems group.
HP has declined to discuss the company’s future smartphone products or plans, but if it doesn’t move quickly it will miss the next great phase of the computing revolution. Its competitors, including Acer, Dell, Lenovo and Asustek, all are jumping into the smartphone market and had phones on display last week, whereas HP was virtually absent.
However, it’s likely that any potential suitors are looking for just a minuscule sign that Palm’s gaining some momentum or able to achieve some level of repeatable success. Both of those seem to be just out of Palm’s grasp.
Bank of America Merrill Lynch analyst Vivek Arya recently trimmed his estimate for the third-quarter to 900,000-1.2 million phone shipments from a prior range of 1.1 million-1.5 million. “We are concerned the window of opportunity may be closing,” he told the WSJ. And, Palm’s marketshare hardly registers at .7 percent of the total market, according to Gartner. By comparison, Apple (NSDQ: AAPL) had 14.4 percent, and BlackBerrys represented nearly 20 percent.