Plummeting Palm in Search of a Suitor

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Palm has fought the good fight, but disappointing smartphone sales and even more disappointing stock prices are forcing it onto the auction block. The sale of Palm has moved beyond the rumor and speculation stage with Palm actively seeking a buyer this week.

Palm could have been a contender. Given its origins as the developers of the ubiquitous Palm Pilot personal digital assistant (PDA), Palm should have been a natural to dominate the smartphone market. But, the Treo devices were perhaps before their time, and RIM came along with the BlackBerry to steal the smartphone market out from under Palm.

There are Palm loyalists who will staunchly defend the WebOS platform--pointing out the many ways they perceive it to be superior to other mobile operating systems such as iPhone, BlackBerry, or Android. However, even if we concede those points, technical superiority doesn't equal market dominance--just look at IBM OS/2, Sega Dreamcast, or Commodore Amiga.

What does the demise of Palm mean for business customers, though? Well--for most customers, say the roughly five percent who rely on Palm WebOS smartphones, it might mean working with an obsolete, unsupported platform in the very near future. Of course, judging by the plummeting market share each quarter, most Palm WebOS customers are already actively seeking new smartphone platforms and that is partially why Palm is in the position it is in.

Five percent market share isn't necessarily a reason to fold up the tent and call it a day. Android was below four percent as of the comScore survey results at the end of last November and it was being hailed as the smartphone platform to watch out for.

However, Android was on the way up--gaining roughly the equivalent of Palm's total market share in just the most recent quarter--while Palm has been steadily declining. Plus, Palm doesn't have the reserves that Google or Microsoft have to weather the down months (or years).

Speculation thus far suggests that HTC and Lenovo are the two leading suitors to snag Palm off the auction block. Other names have been tossed around, though, including Motorola, HP, Dell, and even Microsoft. Obviously, some of those companies would have much more to gain than others, and some of the companies on this list are much more speculative than others.

One name that hasn't been mentioned much is Apple. Granted, Apple has arguably the hottest smartphone platform available with the iPhone, so it doesn't need WebOS. There are some unique and innovative aspects of WebOS that Apple could adapt into the iPhone operating system, though, and if nothing else Apple could buy Palm just for its intellectual property and patent portfolio.

WebOS may be a phenomenal smartphone platform, but competing head-to-head with the iPhone, Android devices like the Droid and Nexus One, and Microsoft's upcoming Windows Phone 7 smartphones is an arduous task. It makes more sense for a Lenovo or Dell to acquire Palm and WebOS to leverage in the emerging tablet device market.

Battle lines are being drawn between Apple loyalists and the Microsoft faithful comparing the benefits and pitfalls of the Apple iPad and the HP Slate, but the fact of the matter is they are entirely different machines made for entirely different purposes. There will be a market for more smartphone OS-based tablet devices, as well as a market for larger, PC OS-based devices that are more like notebooks with a touchscreen instead of a keyboard.

WebOS is an innovative and capable platform, and could easily rise from the ashes like a phoenix and emerge as a tablet device OS to contend with Apple iPad. We shall see.

Tony Bradley is co-author of Unified Communications for Dummies . He tweets as @Tony_BradleyPCW . You can follow him on his Facebook page , or contact him by email at .

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