HP is a company which is cash rich or can be called as a cash cow but totally with a nil presence in the mobile phone market. Given this background, purchasing a company which owns an excellently developed operating system for mobile phone is a wise and smart decision. Through this decision, one can say that HP has plunged into the mobile phone business by picking up a holistic strategy which is novel. This decision and the choice of purchase will also make HP a very healthy competitor in the industry.
The current market for mobile phone is tremendous and it has already reached $100 billion. The market is seeing voluminous growth in smart phones with 182 millions supplied in 2009. The volume is anticipated to increase to nearly 247 million pieces, the current year, as per the opinion of iSuppli. In this scenario, when almost all the competitors of HP have developed a forte for themselves in the mobile phone market, HP not entering into it is considered as unbelievable. Through acquiring Palm, this vacuum is filled and HP gets a brand which is currently the tenth largest in the industry. Its plan of infusing plenty of cash, associating with Palm, the company is moving towards a solid and rapid growth path, as opined by Todd Bradley, who is the Company’s executive vice president. Experts feel that mobile phones were not the priority list for HP for years. Compaq was the leader in offering handhelds under the brand iPaq which was quite successful. By acquiring Compaq, HP indirectly entered into the handhelds previously. Though it was successful in the beginning, the effort lost focus when the merger of phones with handhelds happened.
But the current acquisition is not about phones, but it is about entering into operating system which is web-based. This technology, when successful, can be applied to PCs, Phones and even Netbooks. The potential for extending it to other products is tremendous. Though HP is not specifying a timeline for its extension and launch, overall the future looks very bloomy with the potential available in hand. It looks promising that the budget for investing in the research and development wing of Palm would further increase from $ 190 million set aside by Palm. On contrary to the support and positive vibes, experts are also of the opinion that there is no need for such a huge spending on the research and development for an operating system for mobile. It is considered unnecessary and over the board. Though HP is planning to be a major player in the mobile market, experts consider it to be a wrong move. They think, given the competition and its gear up, it is not worth the amount invested. But there is a general agreement that HP has to do something strong to meet up with the competitors. Since it did not have an OS of its own, till this acquisition, using Android was an only option. But that option is available for anyone, since it is free. But the competitive edge is now; HP can say that its software can be a differentiator. To have thier own OS definitely has a lot of benefits because you can control, dictate for changes and can embed both software and hardware for better performance. To conclude, HP must be clear with its plan for Palm whether it is planning to discard the brand name and bring the products under HP brand name. We have to wait and see.