I polled some of the sharpest analysts I know to ask one question: "Why is Palm still an independent company?"
The most common response was, as Jack Gold, principal with J. Gold Associates put it, "The question is, who would want them at this point?" Palm has neither a thriving customer base nor a hot technology to offer to any possible suitor, such as oft-mentioned buy-out possibilities Nokia and Motorola. Those companies (to which Palm executives have almost certainly talked about a purchase in the last year) must feel that a) there's no urgency, and b) the longer they wait the lower the price.
The second answer lies in the cash infusion Palm got last summer. "The future for Palm is really Elevation Partners," the Silicon Valley private-equity firm that put in $325 million in June, says Ken Dulaney, mobile and wireless analyst at Gartner. "As long as they stay in and keep the company going, they will continue."
Answer No. 3 has to do with Palm's legacy, as embodied by co-founder Jeff Hawkins. Besides being a true pioneer in the mobile computing field, Hawkins is both a genuinely engaging fellow and, like most Silicon Valley geniuses, an egotist. The thought of selling off his beloved company, which ditched his pet project, the Foleo, earlier this year after a risible market response, must feel like utter defeat to Hawkins, whose other venture, Numenta, hasn't exactly set the world on fire, either.
Every company, and every brainiac founder, has its price, and Palm may be approaching the point where a breakup or a fire sale is the only option. Certainly Elevation Partners isn't going to stand by and watch that one-third of a billion go down the tubes. Motorola, whose own enterprise arm, Symbol, is itself losing market share, could use the Palm Treo technology and the (supposed) new Linux-based OS that's in the works. Here's another prediction for you: The Schaumburg, Ill.-based handset vendor will reach a bargain-basement deal with Palm, uhh, sometime in 2008.
But I wouldn't take that to the bank.