Skip to main content

Should Apple be Afraid of HP’s Palm Acquisition?

Over the last decade, there are few companies Apple has been worried about. One is HP, which had the only product that had a chance of beating the early iPod, and the other was Palm, which had the best chance of beating the iPhone. HP was tricked into giving up its potential iPod killer, and Palm’s execution was a train wreck. Now the two companies have agreed to merge with a common goal, HP won’t be tricked again, and Palm has the resources of a massive multinational to play with. Life will get a lot more interesting for both Apple and HP as the combined resources come into play around this time next year. However, I do expect, we’ll see a near-term solution (likely Palm designed) by year end.

Let’s talk about the potential of this deal, remembering all the while that both firms have had huge opportunities in the past and failed to execute on them.

HP’s Apple Scare

I captured this story years ago from HP after the HP-branded iPod deal fell apart. Apparently, Steve Jobs, who ironically seems to have excessive access to competitor’s secrets, learned of a coming HP MP3 player and it was good enough that it scared him. He picked up the phone and called HP’s then CEO and offered her a deal that he has never personally offered to any other company since taking Apple over: The chance to sell an iPod clone branded by HP. She jumped at the deal after Apple promised her team they could link it in with their Media Center products and have special colors (the one they initially showcased was HP Blue).

After the deal was cut, Apple underpriced the HP products, didn’t allow HP to bring out colors (arguing that colors like those currently used in the iPod Nano line were inappropriate for an iPod) and blocked all efforts to fully integrate the iPod into HP’s media center. The provision that locked HP out of the MP3 player market, however, held firm. By the time HP was free to bring out their own product, Apple owned the market. It was a brilliant strategy on Apple’s part, but HP was mad, and Carly Fiorina was likely fired because of poor deals like this.

Palm’s Stumble

Palm introduced the Palm Pre at CES and stole the show, much as the iPhone had done several years earlier. Jon Rubinstein had standing ovations, and the iPhone user beside me at the launch event was quite literally falling out of his seat, he was so excited about the product. In many ways it was a better iPhone alternative than the Motorola Droid, but Palm didn’t position it that way. After a series of clearly open challenges to Apple, Palm launched the Pre with what was arguably the worst seeding and advertising program I had ever seen for a product, in addition to going exclusive with Sprint – a cellular service provider that was losing customers left and right.

HP + Palm

Todd Bradley, the executive in line to run HP (and who currently runs HP’s PC division), used to run Palm and knows that company well. He brought a number of ex-Palm and ex-Apple employees into HP. The result is that HP has consistently improved both the look and experiences associated with its products and the marketing that surrounds them, but remained ineffective with its phones.

Palm lacked the resources to make another run at Apple, even though it corrected most of the initial problems with the Palm Pre rollout.

Both companies have a deep desire to beat Apple, because Apple has consistently made fools of both firms. This creates a common goal that should keep the resulting combined company focused. And HP doesn’t require the massive gross margins that Apple needs to survive given the firm and potential pricing advantage as well. If HP can engage Apple in a price war the same way it did with Dell, Apple would be at a severe disadvantage. But first they need a truly competitive product.

WebOS and Palm’s Patent Portfolio are the Keys

With the Apple-HTC litigation, combined with the recent news that HTC had to license Microsoft’s mobile technology for its Android products it has became clear that to compete with Apple, Android isn’t a good choice. Microsoft’s delays with Windows Phone 7 and their unwillingness to license that product for an iPad-like tablet knocked them out as well, leaving only the WebOS and large Palm patent portfolio as the best path to create an iPhone or iPad line that could take the fight to Apple.

This is effectively a declaration that HP and Palm are going after Apple, and they are both pissed and focused.

It’s All about Execution Now, and Execution is Tough

The two companies have to be brought together, and solutions driven into the market quickly to take full advantage of the combined resources. HP messed up the Voodoo acquisition, suggesting there is some risk that this might not go well, and Apple isn’t going to let HP come at them unchallenged. It will likely pull out all the stops in defense. In effect, both HP and Palm will have to admit their past mistakes, learn from them, and execute sharply to get this done. That’s not trivial, but HP has tablet and smartphone display technology in-house that I spoke of previously, an eBook reader, and a set of media management tools that are potentially unmatched in the market out of their lab. Along with the Palm IP, these tools could give them an incredible advantage, if they can execute. That “if” has proven to be a formidable barrier for anyone, including HP and Palm, when it comes to competing with Apple. We’ll see if they make it this time.

Editors' Recommendations

Rob Enderle
Former Digital Trends Contributor
Rob is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. Before…
Best refurbished iPhone deals: Get an iPhone 14 for $507
An iPhone 13 in white color option.

Apple started the whole idea of a smartphone, so it's probably no surprise that it makes some of the best on the market. Of course, they are known for being quite expensive, especially if you want to grab the best iPhones, which will easily run you close to or over $1,000. Luckily, there are some great iPhone deals you can take advantage of, whether unlocked or through a carrier. There are also some other alternatives in the form of refurbished phones. Now, a lot of folks do sometimes shy away from refurbished gear, but it's important to note that many, if not all, refurbished phones come with a guarantee and extended return windows, so you shouldn't worry about getting something defunct. Also, refurbished phones tend to be substantially cheaper than new ones; plus, they do cut down a lot on e-waste, so you are helping the environment.

Either way, we've gone out and found some of the best refurbished iPhone deals out there to save you a little bit extra. We've found a pretty wide range too, so be sure to checkout all the deals available below.
iPhone XR -- from $166
iPhone XR Julian Chokkattu/Digital Trends / Digital Trends

Read more
The iPhone 16’s huge redesign has leaked. Here’s what’s new
iPhone 15 Pro Max lying on the ground surrounded by leaves.

Apple fans might be in for a lukewarm surprise when Apple releases its next wave of iPhones this fall season. Over the past few weeks, numerous outlets — including 91 Mobiles and MacRumors – and independent insiders have shared alleged CAD-based renders of the entire iPhone 16 portfolio.

In 2024, it seems Apple will shower more love on the entry-point models, bestowing them with a slight design refinement on the rear shell. Leaks suggest the camera island on the iPhone 16—and likely its Plus variant as well—will get a pill-shaped makeover. Other changes are reported for the 16 Pro and Pro Max models. There's a lot to cover, so let's dig in.
The iPhone 16's brand-new design
On the current-generation iPhone 15 duo, we get diagonally arranged camera lenses positioned atop a square-ish glass bump. In the upcoming versions, Apple is reportedly replacing it with a vertical pill-like camera island, mirroring the look we first saw on the iPhone X.

Read more
How to find and use transcripts in Apple Podcasts
An iPhone 15 Pro showing the Podcasts Transcripts feature.

Apple has rolled out iOS 17.4 to iPhones, including the iPhone 15 lineup, and this one has some nice new features that you should notice — like support for third-party app stores in select regions. There's also new emoji, improvements to Apple Music, and more.

Read more