Lenovo Now Top Contender for Palm?

In recent weeks rumors have been swirling that mobile phone and software maker Palm is up for sale, following recent disappointing sales numbers that seem to have the company headed for a fall with flooded inventory channels and not many people buying devices. Earlier reports had Taiwan’s HTC—maker of Google’s Nexus One as well as the new Droid Incredible—as a leading contender to take over Palm, but now Reuters is reporting that HTC has decided not to bid on Palm, with a source saying HTC couldn’t find enough synergies between the two companies to make a deal work.

HTC’s withdrawal would seem to leave China’s Lenovo in the drivers’ seat for a possible takeover. Neither Lenovo or Palm have commented publicly on any discussions between the company, but some industry watchers think Palm could be a god fit for Lenovo, which has plenty of cash on hand and wants to expand its presence in the North American market. Palm’s strong patent portfolio of mobile technologies could also be a strong draw for Lenovo as it begins to enter the mobile device marketplace. Lenovo recently launched its own smartphone in China, but has no presence in the U.S. phone market.

In the meantime, the Financial Times is reporting that Palm CEO Jon Rubenstein still believes that Palm can survive as an independent company and was upbeat about Palm’s long-term prospects. In an interview, Rubenstein said the company is working on a slate of new products, and would potentially be open to licensing its webOS mobile operating system for use in other manufacturers’ smartphone if an appropriate strategic deal were to come along.

To date, Palm has cited poor sales staff training as one reason customers have shied away from its webOS phones.

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