The smartphone market just took another surprising turn in a year where the battleground around mobile operating systems has become more intense than it has ever been, as HP acquired Palm for $1.2 Billion.

It has been well documented that Palm’s innovative WebOS has struggled to gain a sufficient foothold in the market, and sell-through has lagged because carrier promotion has been limited. Recently Palm has essentially been shipping a 6 month old device  with limited differentiation along with suffering from mounting channel inventory issues at key carriers such as Verizon and Sprint. Outside North America, sales have also been significantly lower than expected.

While both companies had a proud history in the PDA market (including the iconic Palm V and iPaq), both companies have struggled to gain a serious foothold in the smartphone market.

Whilst $1.2B seems a high price on the face of it, there is clearly and  it makes sense as there are clear synergies, and almost as importantly, a cultural fit, with various ex-Palm employees such as Todd Bradley and Satjiv Chahil present in HP’s PSG team.

• HP lacks presence and a clear direction in its smartphone business. The acquisition of Palm offers great mobile operating system IP as well as product development. It builds out the missing mobile part of the HP jigsaw.
• Palm lacks the channel distribution, efficient supply chain and reach. It lacked the funds to accelerate its product launches and refresh cycles. HP offers Palm the ability to resolve these issues and extend its reach in carrier channels, as well as opening up new channel opportunities.
• HP has spent years optimizing its supply chain capabilities, something that Palm has found a constant challenge.
• HP could potentially be acquiring Palm as a proactive move to prevent competitors getting hold of valuable IP in WebOS. It also warns competitors away from attacking Palm with patent infringements.
• The move would allow HP will offer the valuable WebOS to licensees, potentially creating a rival to Android? Palm’s perceived value is more closely linked to its software and platform development than specifically to its devices. Under one parent, platform fragmentation could be kept to a minimum. It is unclear if there is an intention to take this path at the moment.
• HP could potentially be acquiring Palm as a proactive move to prevent competitors getting hold of valuable IP in WebOS. It also warns competitors away from attacking Palm with patent infringements.
• The acquisition offers HP the ability to scale, WebOS for an emerging tablet and larger device business, where it is a leader and where Microsoft’s Windows Operating System is not the answer.
• The forthcoming Windows Phone 7 Series looks likely to offer little in the way of customisation for mobile operators. Clearly the acquisition of Palm allows HP to put something differentiated into the market.
• HP now has a mobile piece with which to integrate its enterprise software offerings and target the mobile worker, supported by its global services business.

More details of the deal will obviously emerge in the coming days, but what is certain is that HP will increase investment in WebOS, which it perceives to be the leading mobile platform which will offer a serious and credible mobile string to the bow of a formidable, global, tech giant. Interesting (and competitive) times for the mobile devices market indeed!

Andrew Brown

Over the last few years, enterprises and ISVs have tried to figure out how to move “beyond email” for mobile workers (i.e. how to get high value and cost ERP and CRM apps into the hands of users) the term Mobile Enterprise Application Platform (MEAP) has been talked about with increasing frequency, primarily, it seems, as there is little in the way of an alternative term.

                                     Sybase Unwired Mobile Platform.

However, I have never liked the acronym, primarily because it emphasises the application, rather than the complexity in bringing a solution to market, which in reality requires an infrastructure approach and the involvement of several players in the ecosystem. It is also seemingly aligned only with mobile software vendors such as Syclo, Sybase and Antenna software, rather than taking into account how the large business software companies such as SAP and Oracle are changing their approach to the mobile market.

I prefer to use the term “MIP” (Mobile Infrastructure Platform). This is why:

Clearly the mobile worker market is the next critical step in extending simple but rich mobile access to ERP and CRM tools. However, it is also beset by complexity, which explains why some of the largest ISVs are so dependent on partners to deliver not only mobile products but good mobile experiences. For example, SAP has a CRM application that it created SAP Netweaver Mobile, but it was not connected to the back-end database and behaved ostensibly as an “offline” application. Oracle has Business Indicators and Mobile Sales Assistant as well as other tools, but the experience is similar. Indeed, since announcements with RIM in 2007 about native SAP applications running on BlackBerry devices, SAP has been remarkably reticent. The reason? It is very challenging to do.

As a result, companies such as SAP have taken the approach that they took in the adaptive manufacturing sector: build out a comprehensive list of partners to offer solutions. Oracle have done the same. Both companies offer mobile ERP and CRM tools, but have really failed to deliver a rich experience optimized for wireless environments. In March SAP went a step further, when it announced that it will deliver on the mobile CRM application agreed upon a year ago when they announced a co-innovation agreement with Sybase. The result will be Mobile Sales for SAP CRM and Sybase Mobile Workflow for SAP Business Suite, for iPhone, BlackBerry  and Windows Mobile.

This is a step in the right direction, but it isn’t enough. The result of the Sybase agreement may well be an improvement on the partnering model, but companies such as SAP need to acquire the relevant asset (either Antenna Concert, Sybase Unwired, Sky Technologies or another), integrate with their own enterprise software offerings to offer a complete MIP (mobile infrastructure platform) essentially an in-house, scalable turnkey product that can be deployed in many instances. This will require tough choices and no little compromise, but without the industry leaders taking this approach, it will be hard to move the mobile ERP and CRM markets forward. And there is no doubt that the 1 billion+ mobile workers (in 2012) will be the next frontier.

Andrew Brown