Come One, Come All: HP to acquire Palm, Acer announces its own smartphone venture

April 29, 2010 - By Justin E. Gehrke

Yesterday, the news went public that Hewlett-Packard (HPQ)would buy the ailing PDA and smartphone maker, Palm. The $1.2 billion dollar acquisition is seen as a daring effort by HP to make its own footprint in the increasingly competitive smartphone market. The venture is a risky one, at best, as the reigning smartphone giant, Apple, prepares to unveil the latest generation device, the iPhone 4G, at the WWDC, in June 2010. Additionally, PC vendor Dell plans to release four smartphones under its own brand, within the next year. Add to the foray, new devices from HTC and Microsoft and the potential for competition for consumer attention really to really stiffen.

Not to be outdone, PC vendor Acer has announced its intention, as well, to dive into the smartphone market with four models by the end of 2010. Specific details have yet to be announced (or as it the current trend, leaked) regarding specifications, features, what operating system it will run, or even what they’ll look like. Suffice it to say that Acer has made the announcement, to at least tell the world, “Don’t buy anything yet. We might have something fun, too.”

All of this brings up a good point. Why are PC vendors such as HP, Dell, and Acer so eager to jump into a market so clearly dominated by Apple, BlackBerry and other smartphone veterans?

Are right-sized, hybrid tablets the future of mobile computing?

With the WiFi iPad phenomenon in full swing and the 3G iPad phenomenon about to kick off, PC vendors may be closely examining their business models. Traditionally, PC sales have been solid. A look back over the past decade, though, shows that the previously dominant workstation or tower-type computer has been surpassed in sales by its more compact sibling, the laptop. With each passing year, the size of laptop computers has continued to shrink, while their performance capacity has continued to rise.

The past few years gave way to a shift toward netbook-style computers, with companies like Acer and Asus cashing in on the consumer’s desire for a laptop that is truly portable, in terms of weight and functionality. One could say this shift finally culminated with the release of the Apple iPad (WiFi) in April 2010. Combining much of the functionality of a traditional laptop with the touch-screen goodness of the iPhone, the company has quickly catapulted to the forefront of the tablet market. The April 30th release of the iPad (3G) is only expected to increase consumer interest in the tablet market.

As the line that distinguishes smartphones from tablets continues to blur, it seems PC vendors have realized that right-sized products that facilitate mobility may be the only way to not just expand, but simply survive.

Who’s interested in playing the game?

Earlier this year, Microsoft announced its plans to release their latest smartphone offering, the Windows 7 Phone Series. Initial reviews of the device show that it will combine the much sought after touch screen technology, with traditional Microsoft functionality. Earlier this month, details of Dell’s planned foray into the smartphone market with models dubbed the Lightning, Flash, Smoke, and Thunder.

Yesterday’s news of HP’s plans to rescue the sinking ship that is Palm proves that they’re truly serious about expanding beyond their traditional PC offerings. While opinion seems to be divided, among industry insiders, as to the immediate motive for the purchase, both have validity. One school of thought sees HP’s primary motive as a move to obtain all of Palm’s patents, which are deeply ingrained in devices, such as the Palm Pre, in order to develop its own device with a handset maker like HTC. The second school of thought is that HP may simply want Palm’s hardware devices, to use as a foundation for its own line. A possibility here could include keeping the patented hardware design and dropping the Palm OS, in favor of the newer, lighter, and much more agile Android 2.2 OS. Taking this route might significantly shorten the time between the development process and production version of any HP device.

For Acer’s part, the motive appears to be purely financial. While they may not actually have been interested in making a smartphone, the consumer market may have left them with no other option, based on the rationale discussed herein. For Acer, who already has a hugely successful line of netbooks, the transition might not be that difficult. It may simply be a matter of deciding whether to develop a proprietary OS or following the trend and developing a hardware device around the popular Android OS. At the same time, Acer could be planning ahead. By making a smartphone now and integrating touch-screen technology, they may be better positioned to create a hybrid product, in the form of a new tablet, that bridges the gap between their traditional netbook offering and a next-generation smartphone.

The shortest distance between development and the sales floor is a straight line.

For any of the PC makers venturing into the smartphone market, speed and accuracy are the keys to success. In order to at least compete with the Apple iPhone 4G, BlackBerry’s multiple offerings, Google Nexus One, HTC Incredible, companies will have to produce a well-designed, attractive, and fully-functional product, as quickly as possible. Timing is a key component to the success (or failure) of a device launch. Obviously, releasing your product between June 7-11, 2010 (the dates of Apple’s WWDC, where the new iPhone is expected to officially debut) would be the equivalent of one person shouting in a crowded stadium and being expected to actually be heard.

The other important factor is the choice of OS. At this moment, the best choice for any of these manufacturers is to piggy-back on the growing popularity of the Android OS. With its open source-like appeal and ever-expanding Android Market of gaming, productivity, and utility applications, it is one of the shortest routes to take from development to sales. Additionally, it will also undoubtedly help increase the potential for consumer acceptance, since it is already a familiar face in the smartphone market.

For now, the questions will continue to accumulate, while answers will be slow in coming. With so many products, competition for loyalty will be fierce. Ultimately, the rush by PC vendors to compete with staunch veterans like Apple and RIM, as well as upstarts like Google, should benefit the customer, which is the way it should always be.

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3. Reviewing the Latest Smartphone Leak: Dell Unleashes Thunder, Lightning, Flash and Smoke
4. HTC Droid Incredible Release Date and Specs Revealed
5. The iPhone 4: Five Big Bruises on Jobs’ Shiny Apple