Unable to compete effectively against the likes of the iPhone, the Blackberry and Google, Palm has tacitly admitted defeat and has put itself up for sale. Martyn Warwick reports.
The comparative commercial failure of Palm's much-vaunted Pre and Pixi smartphone devices has sealed the company's fate and yesterday it called in Goldman Sachs and Qatalyst Partners to find a buyer. The market approved of the capitulation and Palm's shares immediately rose by 17 per cent.
A few years ago devices such as the Palm Pilot were must-have accoutrements for the aspiring executive and when Palm went to IPO in 2000, at the absolute apogee of the dot com boom, it was valued at US$53 billion - more at that time than General Motors!
Since then though competition, mainly from Apple and Research in Motion (RIM), has grown whilst mobile operators have promoted the iPhone and the Blackberry more than Palm kit. How are the mighty fallen.
The jewel in the crown for any buyer is Palm's WebOS operating system and plenty of hardware companies will be prepared to vie to get their hands on it. Among those though to be interested in making a bid are RIM of Canada, Lenovo of China, Huawei and ZTE of China, Nokia of Finland, Samsung of Korea and - probably the front runner - HTC of Taiwan.
HP is also said to be interested and buying Palm would certainly give the company a quick and easy entry into the mobile market. The same applies to Dell - also rumoured to be sniffing around the Palm tree.
Although it is now effectively an ex-company, Palm isn't saying much. In a comment CEO Jon Rubinstein would say only that he is "disappointed" in the company's performance. It made a net loss of $18.5 million over the trading quarter 1 December 2009 - 28 February 2010 - the period including the Christmas and year-end present-buying season when sales should have been at their highest.
When the quarterly figures were published Palm's share price plunged from $13 to $6, giving the company a value of just $870 million and falling.
However, it's an ill-wind indeed that blows nobody some good and a certain Paul David Hewson will probably do quite nicely out of Palm's demise. Mr. Hewson has a private equity company, Elevation Partners, that owns 30 per cent of Palm. The diminutive Mr. Hewson is better known by his stage name, Bono - as in pro bono, or not, as the case may be.
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