Bringing to an end the long-running speculations about the potential takeover of the erstwhile pioneer, but currently struggling, smartphone maker Palm, PC giant Hewlett-Packard (HP) Wednesday announced its decision to buy Palm for $1.2 billion.
The Palm deal will allow the Palo Alto, California-based HP to venture into the smartphone arena, as well as help revivify Palm devices – preparing the company to face increasing competition from smartphone manufacturers.
The HP-Palm deal, which will likely close by July-end, has surprised many on the Wall Street, largely because there were speculations galore about the takeover of Palm by the Chinese PC maker Lenovo.
The HP acquisition of Palm will join up the smartphone maker with networking gear manufacturer 3Com, which was acquired by Hewlett-Packard earlier this month.
According to analysts, though HP’s foray into the smartphone market, with Palm acquisition will not initially impact the sales of market-leading devices, like the Apple’s iPhone and Research in Motion’s BlackBerry, it might increase pressure on smartphone makers eying expansion – including Nokia and Motorola.
Commenting on the HP-Palm deal, IDC analyst Francisco Jeronimo said: “Nokia will be one of the most affected players,” and added that due to a “wrong portfolio and lack of carrier support, Nokia never moved from its eighth position... in the smartphone segment. This deal puts also pressure on Motorola and HTC.”