Thoughts on Rumoured Buy Out of palmOne by Dell

[Jason Dunn]

<div class='os_post_top_link'><a href='http://www.geekzone.co.nz/content.asp?contentid=2771' target='_blank'>http://www.geekzone.co.nz/content.a...?contentid=2771</a><br /><br /></div>"The rumour mill is suggesting that Dell may buy Palm One. What changes would happen to the market if this really happen? Time for some speculation from our point of view. If Dell did buy palmOne, the question would be - would they continue to license Palm OS or stick to Microsoft? I suspect that Microsoft would be offering Dell incentives to stay with them; incentives that palmSource can’t match.<br /><br />Now if Dell did buy palmOne and they switched them from Palm OS to Windows Mobile, the industry would be turned upside down. Microsoft market share would go from 40.2% to 80.9% (assuming hardware sales are constant). Dell would have 43.1% market share, and HP would have 25.7%. PalmSource would then have Sony's 9.3% market share and not much more. I can’t see them surviving on that..."<br /><br />Great article with some clever insights - worth the read!

[Zack Mahdavi]

Well, have you considered what the die-hard Palm fans would do? Would they also switch to Windows Mobile (I doubt it), or will they switch to Sony and stick with the Palm OS?

Also, what about the average consumer that has already bought some Palm software. Next time they're in the market for a handheld, they'll be shocked to find out that Palms don't run their beloved Palm OS anymore. Do you think they'll really switch to Windows Mobile?

Also, what about software compatibility? I doubt Dell will take the time to pull an Apple and build a "classic" emulator to run Palm OS software. It's possible, but I don't think Dell would do it.

So if Dell did buy out Pa1mOne and switch them over to Windows Mobile, there definitely would be a shakeup. But I think the shakeup will lead to mass confusion and scare away consumers.

That's my 2 cents.. :)

[ntractv]

This would be bad idea all the way around if it turns out to be accurate in my opinion. As much as I myself would never buy a Palm device (then, again, never say never) it is good to keep the flavors of competion. Keep the two worlds separate.

[whydidnt]

I think it is a pretty big leap to assume that just because Dell/PalmOne would be building WM devices that all of PalmOne's marketshare would follow. I think the whole discussion really points out how tenious Palm Source's business plan is. Their survival is really based on one company producing hardware for their procuct, and if that company leaves, they are out of business??

In the long run, I have a hard time imagining how Palm Source is going to survive anyway. I figure that they will have to sell several million copies of their OS to manufacturers each year just to break even, since we know that the OS cost is very small part of the cost in builing a handheld device.

Having said all this - the rules of free market come to mind however - if PalmOne were to quit producing Palm OS devices, another manufacturer would be glad to step up and start selling the same kind of devices to their old market.

[eustts]

I would have to give a big "Whatever...." to this rumour.

Speculation is great, but .......

[ignar]

If the rumor turns out true and Dell is going to use only Windows Mobile OS on their PDA's, it will be Sony who gets the biggest benefits from this acquisition. Like zkmusa said, I highly highly doubt most of Palm users will switch over to PocketPC camp especially when they still can get PalmOS devices from Sony.

[dh]

If I was a decision maker at Dell and suddenly had to make this work, I would continue with both OS's at least for a while.

No question, WM with it's super computing power is better than POS for PDAs. Also POS seems to be the best OS for Smartphones, just look at how nicely integrated the Treo 600 is compared to any MS based product.

I would have my software folks make a nice little app to make my Dell PPC and Dell Smartphone communicate seamlessly together. Then I would work on a single OS that works really well for both applications. This might end up as WM or POS or even neither of them. This is for the longer term though.

Doing it this way, I reduce my companies total dependence on MS and bring the best possible products to market.

Oh, I can't see this happening anyway.

[PPCRules]

I agree that it's not going to happen. Most likely a case of someone digging up some old information and not realizing it's old. Dell has wanted to offer a PalmOS device. But I'd be surprised if they'd be pursuing even that right now. Even having one built and marketing it would be too much of a distraction from their core business for the amount of money to be made (they had to build their own PocketPC because they didn't want to be selling HP (iPaq) computers). So buying PalmOne would be totally out of line.

IF they really were persuing buying PalmOne, it speaks volumes of the sorry state of the Palm OS, that Dell can't find an OEM to build them a unit. Also, there's no reason to extend the speculation to PalmOne making a WM machine. IF they bought them it would be to offer a PalmOS device. And get into phone devices.

But, I agree that it's not going to happen.

[Felix Torres]

&lt;sigh>
Okay, simple question:
Where is the profit for DELL in any scenario involving a PALMONE buyout?
Never mind the market share games and scenarios; just calculate the return on invesrment for Michael Dell.

Question: how much money does PALMONE *earn* in a given quarter?
Never mind the volume in sales, just look up the net profits?
Are there any?
How about legal liability over tge XEROX graffitti suit? Palmsource alone isn't liable, is it? (The whole company isn't worth the $250 million XEROX wants.)
How much money was HANDSPRING making off TREO when they cashed out?
How fast is TREO market share growing?

Now, for *this* DELL is going to shell out, what? $100 million? $200?
What's the return on investment?
What's the strategic value in handing over Palmsource to Sony at firesale prices?
Does anybody think PalmOS market share will ever again be more than it is today?
If they're real good, they'll hang on to 40%.
(And most of that will be in the blister-pack ZIREs).
If they're not, they'll drop to 20.
(Don't see them going to zero, but the latter is more likely than the former.)

If I'm Michael Dell and I *really* want to get into smartphones, you know what I do?
I call the CEO of Legend.
Two weeks later, I have a smartphone I can call my own to sell.
And it wouldn't cost me $200 million, either.
*If* I wanted to.
Which, If I'm Michael Dell, I probably *don't* want to.
Dell likes commodity products, but he also likes profits.
And in the cellphone business the only profits to be found outside of China will belong to the phone companies.
This is a lose-lose proposition.
No. Go. period. 8O

You know, if I was at the SEC, I'd track down the source of the rumors, cause this sounds like a classic pump-n-dump...

[bigkingfun]

If Dell did buy PalmOne, it could play right into Sony's hands. There was a thread about Sony buying Palm a while back...

http://www.pocketpcthoughts.com/forums/viewtopic.php?t=9636

That article has a link to another one from none other than Jason Dunn from summer, 2002, so it's not a new idea. Interestingly, Jason's article predicts that Sony will own Palm by Fall, 2004.

Sony likes to have their proprietary stuff, so if Dell bought out PalmOne and switched everything to Windows Mobile, Sony could buy up PalmSource, stop licensing it and ultimately control the POS market.

[ombu]

Holy flying cows!!! What a thingie, I'm glad to be a Palm user, my new dell-T5-WM2005 is just great, Palm did it again and there's no way MS could even dream with such a friendly, powerful and nice OS. :)
... from an average user (80%+ population) thread dated 7.11.05. :mrgreen:

[devhen]

If Dell does buy out PalmOne I think you can expect to see some PalmOne devices being designed with Windows Mobile as the OS. However, for Dell to take PalmOne and turn it into a Windows-Mobile-only PDA supplier is silly. There would still be several PalmOne devices running the PalmOS.