A process of elimination which has, apparently since February, cast aside a who’s-who of possible suitors, has left Lenovo as the only prospective suitor for Palm, Inc. still standing, after everyone else told Reuters no. It could mean Lenovo is genuinely interested, though it could also mean the only ones giving Palm any positive value…are in the press.
The thing about Lenovo is, it already has a smartphone. In fact, it debuted in its home country of China just last Tuesday, and it’s no slouch: It has a stupid name — LePhone — but it features the astounding 1 GHz Snapdragon processor that’s at the heart of HTC’s latest models, a widescreen AMOLED display, Wi-Fi, and an eye-catching QWERTY display with the D-pad in the middle. It was running Android 1.6 at CES in January, though reviewers say it should be running Android 2.x today. Arguably, Lenovo already has a phone that could defeat a Palm Pre Plus in a comparison test in its home country. And though analysts have said Palm could give Lenovo an entry point into the US market…wouldn’t it be more sensible to enter the market with the phone you’re already making?
If Lenovo’s phone is as groundbreaking as reviewers say it is, you might think the company wouldn’t need to purchase Palm even to remove a competitor from its midst. But NPD’s best analyst on the subject, Executive Director of Industry Analysis Ross Rubin, still sees a scenario where Palm could benefit Lenovo’s portfolio.
“Palm needs cash, time, and access to high-volume manufacturing resources; Lenovo could provide all of these as well as significant IP that it owns from the ThinkPad line,” Rubin told Betanews Friday evening. “Perhaps the best thing about Lenovo from a Palm product perspective is that it has been particularly early to announce a smartbook. WebOS could power such a device or be an alternative ‘quick boot’ operating system for ThinkPads, but these are not particularly strategic products or features for the company. Palm would open doors for Lenovo in the US handset market, but Linux rules the Chinese handset market, and PC makers getting into handsets tend to license the OS as they do with computers.”
As for the reciprocation — what Lenovo could do for Palm — Betanews Contributing Analyst Carmi Levy doesn’t see much of a payback. But that doesn’t mean Palm can afford the alternative: going it alone.
“I firmly believe Palm has exhausted its ability to fly on its own, and needs to be acquired in some capacity before it slips off the back of the mobile technology market treadmill,” Carmi told us today. “But the company can’t afford to simply say yes to the first suitor that waves enough dollars — or Euros, or Yen — in its face. The key issue here is fit, and I’m not convinced Lenovo would know what to do with Palm if it managed to win its corporate heart.
“The key criteria is core competency in building developer support and evolving the strategy beyond the hardware. While Lenovo certainly needs a way to extend its offerings beyond the PC market, and in that capacity would see Palm as a quick route to mobile bliss, it isn’t the top player on the developer front and as such would be a poor complement to Palm’s needs.”
Huawei is the Chinese telecom manufacturer that was first on many people’s lists to make the deal with Palm, with HTC a close second. However, Reuters apparently learned of Huawei’s interest in Palm when it learned from its source that it was no longer interested in Palm, after two months of negotiations no one knew about. Still, Carmi believes it’s too early to take HTC or Huawei out of the picture.
“HTC has been playing in this pond both directly and indirectly in bringing OEM and its own-branded handsets to market. It has a significantly shorter learning curve than Lenovo and stands a much more realistic chance of bringing to the table the kind of beyond-hardware competencies that Palm so desperately needs,” said Rubin. “Huawei is the dark horse here, but perhaps the one that offers the most compelling out-of-left-field story. It’s certainly the hungriest of the potential buyers, and as such would see a Palm buy as a global seal of credibility. It would probably be more willing than the others combined to invest whatever it takes to make Palm relevant again.”
Ross Rubin disagrees; although from his vantage point, there may have been at least something to a Huawei + Palm tie-up, the better names were probably taken off the table months ago. If there’s any hope left, he believes it’ll come from someone who’s both a dark, dark horse and a bright, white knight.
“Palm could be an asset to Huawei, but it is rather removed from the core business; Palm likely would not receive the kind of attention and expertise it needs within such a company,” Rubin told Betanews. “From a product fit perspective, RIM could have been a good suitor for Palm. It has strong market share in Palm’s native market, great access to the enterprise, a relatively open philosophy, and low barriers to application development, an area where RIM needs help. Like Palm, RIM has pursued vertically integrated portfolio diversification. But next week will likely bring news of the future of BlackBerry OS, to which RIM is committed, and there would have been cultural conflict.
“Developing and supporting a homegrown advanced operating system is an expensive undertaking. Microsoft, Google, and Apple can invest because the handset OS supports other vested interests the companies have. It’s often the case in instances like this that an unexpected buyer swoops in late in the game; all of the obvious candidates seem to lack the financing, flexibility, or fortitude.”