What CIOs Should Know/Do About HP's Acquisition Of Palm

HP's acquisition of Palm is all over the twitterverse at the moment. And everyone has an opinion on it, and what it means (which brings to mind one of my favorite movie quotes). There are precious few facts around at present - and only time will tell exactly how the acquisition will pan out. Either way, CIOs should know the following facts about HP and the acquisition of Palm:

  1. HP is good at doing acquisitions. They have made a lot of them over the years (Compaq, EDS, Mercury, Knightsbridge, 3Com to name a few). Most have gone well. Like Cisco, acquiring and merging companies is a key capability for HP. The only unknown here is that most companies they acquire are growing or at least performing well. This is not so much the case with Palm. But the recent history of taking poor performing business units and increasing their profit margins bodes well for Palm.
  2. Mark Hurd has stated many times that they plan to be number one or two in every market they play in. And for the most part, they are. To achieve this for Palm will require a large investment, and will mean they will need to sell Palm devices more effectively into the enterprise space than they are now. HP has a great presence in this space - but with RIM as the dominant player there now and Apple making significant inroads, it will not be an easy play with a whole new OS (WebOS).
  3. WebOS is good at multi-tasking. While this may not significantly differentiate the product in the consumer space, it is a key capability for organizations looking to add mobility to business processes.

So these are the facts. Based on the investor presentation, one would assume that HP will be porting WebOS to a tablet-style device shortly (a picture of a tablet appears in the presentation twice!). So putting these facts and assumptions together, it would appear that HP will be aiming to be number one or two in both the smartphone and the tablet markets.

As a CIO, is this an important announcement?

Yes it is.

HP already provides a fair chunk of many companies' ICT hardware and IT services requirements (and a growing % of their IT management software). This move means that HP will be better positioned to become a "one stop shop" for more of your ICT requirements. It also may finally convince many organizations to take their enterprise mobility strategies more seriously, as you will be able to acquire and manage the solutions in the same way as you do your PCs, servers, printers and other hardware. Having complete control of the product lifecycle, and a single point of support will be appealing to many firms, although there are still large pieces missing from the enterprise story (how the devices are managed, monitored etc?).

Also, with HP likely to port the WebOS to tablet devices, it provides an alternative development platform to the iPad - but like the iPad (and unlike Windows 7), this is an OS designed exclusively for the finger, making it "touch friendly". There is already significant interest around the iPad as a device that could either find its way into the enterprise, or one that changes the way businesses offer their services to consumers - so the entry of the WebOS into this space gives companies another development platform - perhaps one that is easier to control from an enterprise perspective?

So what should you do now?

Wait. When HP makes big acquisitions it is worth watching as it usually transforms HP and hence transforms the products and services they can offer to you.

See how the acquisition pans out. It should happen quickly. The smartphone market moves very quickly - so HP/Palm will not have the luxury of taking their time to integrate the businesses. I would suggest we will see some new devices in the market shortly after the acquisition is finalized, and any tablet device will follow within 2-4 months of the final acquisition date (if not before). If your IT department is looking at developing for the iPad or iPhone, WebOS may be an alternative. While any HP/Palm branded tablet will probably not break new ground like the iPad did, it may pick up the "long tail" of the tablet device market - meaning that while it does not have the "sex appeal" of Apple products, it might get a larger market share in the longer term.