Short Thoughts: HP, Palm and IP

Just read the news that Hewlett Packard (HP) has bought Palm for a rumoured $1.2 billion.

Even though this seems like a lot of money I think HP has snagged a bit of a bargain. Recent Palm shares were trading at 30% of their 52-week-high value, following the relatively meagre sales performance of the Palm Pre.

It also seems a shrewd strategic move with regard to intellectual property (IP). Palm likely has an extensive patent portfolio covering touch screen technologies and mobile devices, areas into which HP has recently moved. Considering Apple’s recent assault on HTC the acquisition of Palm will naturally beef-up HP’s portfolio allowing a more aggressive defensive or counter-claim if Apple come a-knocking.

A strong patent-portfolio will become important if HP looks to use webOS on the Slate and go head-to-head with Apple’s iPad.

One thought on “Short Thoughts: HP, Palm and IP

  1. Some cogent comments from my esteemed colleague Matt Hoyles (no relation):

    The reason the $1.2billion price tag sounds so high it that HP will be taking on a lot of their debts. The share price comes in significantly below this value even though HP are paying a premium (23%) on top of palms recent trading price.

    I’ve read rumours recently estimating Palm’s patent portfolio alone at around the billion mark. The key to palm’s portfolio is that a lot of it is reasonably old and (I presume) tested. Apple have only recently been filing touch screen patents; Palm have been at it for years.

    A personal guess it that the recent licensing deal between HTC and Microsoft over the use of Android (infringing Microsofts patents) is an indicator of the potential value of the portfolio. If HP need to pay Apple & Microsoft to run a tablet with Windows 7, not only can they now throw their own patents back at them to negate the cost of any licensing agreement but also can look into running WebOS on the devices, significantly cutting their costs. Although as Dell have done with their desktop’s I imagine they will run both to maintain the customer choice (?).

    I agree with you that it is indeed a bargain. HP have bought the most critically acclaimed mobile OS, that is highly scaleable due to the nature of the software (for tablets & phones). They can spread into new markets and solidify in old ones – all on top of obtaining a potentially invaluable defensive (or offensive if they choose) patent portfolio. As an aside, Palm may not have had the clout to enforce a lot of their patents (?) given their debts. They might now be able to do so.

    Potentially, the biggest loser in this could be HTC. A hardware manfucturer with a proven track record has entered a congested market with a good piece of software. HTC are the incumbent hardware manufacturer that is now left without a piece of software to push of their own – relying on Android to help them out. They have nothing to differentiate them from the other hardware manufacturers, eg. Samsung and Motorola, apart from ‘Sense UI’.

    The Apple v Nokia patent litigation is another example of defensive patent portfolios being used in the mobile devices market place, albeit Apple using it to defend from Nokia!

    Matt

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