Why HP Bought Palm (HP, PALM)

PCMag.com talks up why Hewlett-Packard Company (NYSE:HPQ) bought Palm, Inc. (NASDAQ:PALM).

(PCMAG.com) If you examine the evolution of the smartphone—particularly after the release of the first iPhone—it's clear that the devices are really just small PCs. The major PC players didn't understand this at first. Only in the last couple of years have they come to embrace this concept.

Dell was perhaps the most proactive of the lot, bringing in former Motorola execs to run its PC business. Now the company is coming out with Dell-branded smartphones. HP, on the other hand, allowed its Windows Mobile-powered iPaq line to languish as it waited for Microsoft to roll out a new version of its mobile OS. As HP waited for Microsoft to move, Apple, Google (via Android), RIM, and others, bulked up their lines of smartphones, taking the lion's share of the smartphone market from HP.

It's important to note that Apple didn't just come out with a new smartphone, it delivered a complete solution, including hardware, software, and services. The company controlled the complete customer experience. This is very much at the heart of why Apple has been so successful with the iPhone.

HP was clearly jealous of Apple's success, but the company could only view this emerging market through more traditional PC eyes. HP continued to produce great hardware and provided great services, but it was forced to use the available operating systems, in order to follow its more traditional PC approach to mobile platforms. But if the company used Windows Phone 7 or Android, Microsoft or Google controlled its destiny. 

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SOURCE: http://www.pcmag.com/article2/0,2817,2363286,00.asp