Hewlett-Packard (HP) has emerged as the surprise acquirer of Palm, for a purchase price of US$1.2 billion. In a joint statement, the two companies claimed that ”the combination of HP’s global scale and financial strength with Palm’s unparalleled webOS platform will enhance HP’s ability to participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets. Palm’s unique webOS will allow HP to take advantage of features such as true multitasking and always up-to-date information sharing across applications.” HP – the world’s largest PC manufacturer – also talked up Palm’s ability to enable it to compete more aggressively in the “more than US$100 billion connected mobile device market.” The deal is expected to close by the end of July and will see Palm’s current chairman and CEO, Jon Rubinstein, remain with the company.

The deal ends recent speculation surrounding a potential suitor for Palm; earlier this week HP’s rival Lenovo emerged as a leading contender. Other names in the frame were Dell, HTC and Huawei. Last year Palm attempted to revive flagging fortunes with the launch of its webOS smartphone operating system and the high-profile Pre and Pixi devices. Despite very positive reviews of both the software and hardware, sales have been disappointing and the company reported a dire set of its most recent financials. “This is great news for Palm, who has been searching for a ‘white knight’ to help it out of a severe sales decline,” noted analyst Jack Gold. “This acquisition has dramatically altered the mobile market in both smartphones and other portable devices.” Whilst praising the positives for Palm (in the form of HP’s ability to fund the much-needed marketing Palm needs to get noticed), Gold countered with a warning that HP has made acquisitions in the past “that did not really work out, and HP has not always been good at integrating acquired technologies in their business.” Of note, HP already has a mobile device portfolio (Windows-based PDAs and business handsets branded iPAQ). “HPs Windows Mobile phone business is dying a rapid death and HP would have had to totally revamp its product line in order to stay in the smartphone business,” added Gold.