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Palm Up for Grabs?

Dan Jones over at Unstrung is reporting that ailing Treo-maker Palm could be wooing suitors and that Motorola, Nokia, or a private equity firm could be potential bidders. Whoa, Nelly!

It's no secret that Palm has had its share of troubles recently. With share prices dropping amid fierce competition among smartphone sellers, the company hasn't had a significant innovation since the fall 2003 launch of the Treo 600. All the subsequent Treos have built off the success of that one platform and have failed to make significant changes to the core technology.

Meanwhile, Palm has ceded market share to Motorola and Nokia, who have sped past Palm with interesting designs of their own (MotoQ q9, Nokia E90, and E61i) at prices far lower than the average Treo's $400 tag. The Q's $200 and E62's $100 street prices are very attractive, especially for prosumers looking to make the switch to a smarter platform.

If there was one thing plainly visible at the 3GSM show in Barcelona this past week, it's that Motorola, Nokia, Samsung, and others are all very interested in the smartphone market. Considering the number of new Windows Mobile 6 devices announced this week alone, smartphones seem to be the new "it" devices to have. Palm failed to make any significant announcements at the show, and didn't even update the Treo 750 to Windows Mobile 6.

Motorola and Nokia could each benefit from absorbing Palm for different reasons.

Motorola needs more than just the Q in its lineup if it intends to be a serious enterprise smartphone provider. Adding the Treo to its portfolio could improve enterprise penetration. Nokia, on the other hand, has hardly any presence in the U.S., even though its worldwide market share rates the No. 1 spot with more than 36%. Adding Palm to its lineup of smartphone devices could help it attract more market share in the U.S. (I wonder what a Symbian Series 60-based Treo would be like...)

However it plays out, Palm needs some serious innovations to remain a standalone success in the smartphone market. As the years have ticked by with only evolutionary changes in its product lineup, the likelihood of this happening seems smaller and smaller.

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