Hewlett Packard has announced on last Wednesday that it will buy the industry’s struggling dwarf, Palm for $1.2 Billion. The announcement has triggered the shares of Palm to increase their value by about 28%.  This move marks the entrance of HP into the smart phone segment, a company more known as the one of the world’s largest desktop and laptop manufacturer.

HP’s vice president Todd Bradley has issued a statement that HP aims to build up on Palm’s innovative technology for the mobile platform and also expand on it. Palm has been struggling to survive in the cut throat competition since a long time. Ever since the Palm Pre and its sister phone the Pixi failed, Palm has been given the choice to either sell itself or declare bankruptcy by industry analysts. The last few months quite a few rumours have been floated about the potential buyers for Palm. First it was HTC which was rumoured to buy Palm but soon HTC backed out. There were also rumours of Lenovo considering to buy Palm which would enable them to enter the smart phone market. Finally HP has officially announced the takeover.

A lot was expected from the all new webOS from Palm but a wrong marketing strategy, the tremendous success of the iPhone and also the positive reviews for Google’s Android platform had closed the doors for Palm. HP’s takeover of Palm opens a lot of doors for Palm. Palm as a company possesses a lot of bench strength in terms of engineering skill and innovative knowledge. HP can now revive its almost non-existent smart phone business. Also the technology HP’s seeks to gain from this takeover is more in terms of software rather than hardware. Palm’s webOS is a brilliant idea whose potential the company has failed to capitalise on. HP can now build on this platform combining with it its own hardware specialization thereby getting into the mainstream competition in no time. HP also has a worldwide distribution network, another factor which will help in recovering Palm.

The most interesting point to be noted is what HP will do with the webOS. Windows Phone 7 Series has proven itself to be a great OS for the smart phone and every smart phone manufacturer is now intent on releasing Windows based phones along with Android based ones. HP could also go the Apple way and utilize the webOS for tablets. Palm’s takeover also empower HP over any possible legal disputes thanks to Palm’s patents.