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Apr. 30, 2010

According to new numbers from wireless industry research firm iSuppli, global smartphone shipments are to rise to 247.4 million units this year, up about 36 percent from 181.8 million last year.

iSuppli added that total cell phone shipments are projected to climb to almost 1.3 billion units this year, up over 11 percent from 1.14 billion last year.

On Wednesday, HP announced that it will acquire smart phone maker Palm for about $1.2 billion in cash. HP will acquire all of Palm's outstanding stock for $5.70 a share, a 23 percent premium over Palm's closing price of $4.64 Wednesday.

iSuppli also noted that Palm was the world's 10th-largest smartphone brand in the fourth quarter of last year, accounting for about 1.5 percent of unit shipments, despite the company's share of the global smart phone market remaining flat during most of 2009.

But now, with enterprise-orientated HP by its side, heavyweights like Google, HTC, RIM and Nokia now all have a much bigger competitor in Palm.

Most analysts interviewed agree that HP acquiring Palm will be good for the industry as well as consumers.

And while it may not experience a direct hit in the smartphone segment as of yet, Apple may soon start to feel Palm's shoving when it comes to PC tablets, a market in which WebOS could easily compete with both Apple's OS and Android at the same time.

Some observers say that HP has made no secret of its tablet aspirations, which the computer maker sees as a key growth area for at least the next 4 to 5 years. This could represent billions of dollars in new sales for HP.

Still, not everyone is convinced that HP will be able to pull this off and turn Palm around in the right direction.

After all, it's a well known fact that Palm did a very mediocre job at trying to market its latest products introduced less than a year ago with much fanfare and hoopla.

Palm debuted its Pre smartphone in January 2009 amid great expectations that it might pose the first real challenge to Apple's iPhone. But a bizarre marketing campaign, an exclusive contract with lower-profile wireless carrier Sprint, few apps, and the surprising success of Google's Android mobile platform overshadowed analysts' praise for the Pre's WebOS operating system.

Tina Teng, a senior analyst on matters of wireless communications for iSuppli, notes that the fight for dominance in the world of wireless is becoming increasingly focused on the mobile Internet and smartphones.

“Any company that can manage to control the flow of revenue from wireless data users coming from subscriptions, ad sales or app store revenues—stands to benefit enormously,” said Teng.

Other analysts admit that HP has a strong track record in acquisitions, speculating that the company will likely take the best bits of Palm technology and make them even better, so the potential for success is there, even if we will now have to wait and see how well HP integrates Palm into its mainstream operations, both from a corporate perspective as well as marketing feat.

But one thing is certain: Hewlett-Packard's huge sales channel and very strong ties with enterprises large and small is much too powerful to ignore and Palm would have been hard pressed to find a better suitor, and especially for the cool sum of $1.2 Billion in cash.

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Source: iSuppli.