HP Buys Palm: What Should Happen

The tech world was taken by surprise by the news that computer giant HP (s hpq) had initiated a purchase of beleaguered Palm (s palm) for $1.2 billion. Palm has been in trouble for a while, and had been actively shopping for a buyer to bail them out. A few companies had been mentioned in the press as interested in Palm, but no one gave HP a thought. The merger of HP and Palm is probably the best possible scenario for Palm, and it will be fun to watch the process. HP has the resources to make the most of Palm’s technology, and experience at taking over innovative companies (remember Compaq?). Here’s what I think will happen with the merger, along with my thoughts on what better happen to make this work.

HP is in a unique position to take advantage of the Palm takeover. It is in the phone business, but not really. HP was big in the PDA segment for years, but never made a successful transition into the smartphone age. There are good people in this area with HP, but they’ve never been allowed to innovate. The absorption of Palm into the HP Personal Systems Group will be an infusion of talent and know-how that HP can leverage immediately.

That is first and foremost what the new HP/Palm team must do — release a new webOS phone that blows Palm’s past phones out of the water. Take HP’s great skill at producing top-notch hardware, and pair it with webOS to make a smartphone that will take the segment by storm. I have no doubt it can be done, and it must be done quickly to create the buzz needed to make people watch HP’s phones going forward. Make a webOS phone with hardware that rivals anything in the Android segment. Prove that webOS, coupled with outstanding hardware, is the best smartphone platform available.

HP must focus on the Palm/webOS effort in its phone business after the merger is complete. Drop Windows Phone 7 and work solely with webOS; no dilution of effort in the phone business. Palm’s OS is as good as anything on the market, so take it and run with it. Continue to innovate and grow the OS with the help of the Palm team. Send a clear message to the smartphone community and market that this is your product.

Throw a lot of resources into the Palm developer community. This is crucial to the success of the platform, and HP has the muscle and money to make it a vital part of the equation. Get developers to embrace the platform, no matter what it takes. Bring back those developers who have dropped webOS due to Palm’s problems. Make this a priority within HP and the phone group. Throw a boatload of money at developers if you must, it is crucial to the future of the platform.

Drop the Palm brand. This is not something I say lightly, I am nostalgic about Palm and the brand. But I believe it is vital that HP send a clear message to the industry that it is behind the webOS platform 100%. A clear way to do that is to bring it into the HP branding scheme, and quickly. Go all in with Palm by bringing it totally into the HP family. On every front it is important to send a clear message — Palm is HP now, and we are going to run with it.

Produce a webOS tablet that rivals the iPad. I firmly believe the webOS platform is a good one for such a product, and HP’s expertise in making mobile computers can be leveraged to full advantage in such a device. This will create a new product line that has amazing potential for HP, and all of the pieces are already in place with the merger to make this happen. HP can still go with the HP Slate, although that is just a netbook without a keyboard. What will be better is a thinner, lighter tablet with a mobile OS. That will truly compete with the iPad.

An HP tablet with webOS opens up the possibility for an ecosystem that can take on the Apple/iTunes/App Store. HP has the clout and expertise to use the webOS phone and slate lines to add apps, music and video to the mix in such a way that eventually HP can take on Cupertino.

The merger of Palm and HP will not be without cost cutting, and that means losing good people. It is inevitable given the high price paid for Palm. HP must do this intelligently, and without hampering the Palm team too severely. Make the combined team work well together after the merger. The priority should be fast release of new products that make a difference.

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