HP completes Palm purchase

HP has completed its purchase of ailing handset-maker Palm in a deal said to be worth US$1.2 billion (AU$1.4 billion).

In a statement on its website, HP said that the purchase gives it significant headway into one of technology’s fastest-growing segments with Palm’s innovative webOS platform and family of smartphones.

An SEC filing in May showed that Palm had been "in contact" with 16 companies about a possible merger. From that list only six became serious contenders, with HP at the forefront.

After it was confirmed that HP was going to purchase Palm, chief executive Mark Hurd said the primary objective was to acquire the intellectual property, which included the webOS platform.

The deal also means that HP will own a family of smartphones, including the Palm Pre and Pixi.

“With HP’s full backing and global strengths, I’m confident that webOS will be able to reach its full potential,” said Jon Rubinstein, former chairman and chief executive of Palm.

"This agreement will accelerate the development of this platform with new resources, scale and support from a world-respected brand.”

Palm has been struggling because of poor sales of its devices, despite the fact that they were generally well received, explained Francisco Jeronimo, research manager of European mobile devices at analyst firm IDC.

“Palm is not well known in Europe and only had the financial resources to market itself in France and the UK. HP will be able to provide the financial clout and use its partners and marketing channels to support the Palm brand,” he said.

“Although the purchase was a little expensive, HP will see a return. Now it has the webOS, the firm will not be dependent on other companies and will be able to fully control its roadmap, OS development and devices.”

There is no point in killing off the Palm brand as it has a legacy of devices and is strong in the US, Jeronimo added.