Palm Is On The Block And Getting Desperate


It seems the leading candidate to buy Palm is Lenovo, according to Reuters. This would make sense: as we’ve said before, Palm’s last chance is an acquisition, and Lenovo, having acquired IBM’s PC business years before, likes to acquire big but troubled US brands to gain a foothold in that market.

Meanwhile, Palm CEO Jon Rubinstein says to the Financial Times that Palm doesn’t need acquirers, and everything is fine.

So, what does it all mean for Palm?

First of all, Palm is definitely looking for an acquirer. Rubinstein suggested to the FT that Palm could straighten out its business by getting out of hardware and simply licensing out its WebOS platform. This is just a sign of desperation. Handset manufacturers either have their own platform (Apple, Nokia), or access to a platform that is free and has more apps (Android). This is an excuse Rubinstein has come up with to save face and as a public negotiation move while he tries to sell the company.

So basically, Palm is more on the block than ever, and getting a little desperate. Reuters points out that, if not Lenovo, another big Chinese handset maker would make a good acquirer because they’re more cash-rich than their American counterparts, and they want access to brands and expertise to tap into the juicy US market. (HTC, meanwhile, is reportedly out of the running. Given how much HTC has bet on Android, we didn’t think it was likely.)

Meanwhile, ZDNet points out that Lenovo doesn’t need Palm because it already has a very good Android smartphone that it is prepping to launch in China and that could give its mobile business a big boost without having to shell out cash for Palm.

And that’s Palm’s problem, in essence: we still think it has lots of great assets for a potential acquirer, but it’s a nice to have, not a must have. It would be nice for any big player in this industry to have Palm’s brand, software and talent. But all of them already have strategies that don’t depend on Palm.

Our money is still that Palm should sell itself and could fetch a good price. But it’s not going to be easy.

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