Actual Analysis: NPD's Ross Rubin on the formula for making HP + Palm work

The potential of HP + Palm + Microsoft

Anyone who thinks HP hasn't managed, or cannot manage, a software platform on its own has forgotten -- or is wholly ignorant of -- HP's success as the master of HP-UX, which makes it the "Face of UNIX" for a big chunk of enterprise customers. When HP uses the single word "Scale" to describe the benefits it can offer Palm, that's the scale it's talking about.
Not a lot of consumers know (or care) about HP-UX. "However, we have seen HP move to try to differentiate its products from other PCs running Windows by doing things such as developing the TouchSmart layer for its all-in-ones, and some of its touchscreen notebooks," noted Rubin, in his talk yesterday with Betanews. "Perhaps, particularly faced with the prospect of having limited control over the user interface in Windows Phone 7, having access to webOS allows [HP] to define the customer experience a lot better than licensing another operating system might."

Wouldn't HP have had that same opportunity if it had proceeded with what many expected it to do anyway: produce a line of Android phones? "Certainly Android has a lot of momentum in the marketplace right now," Rubin responded. "There's one liability with Android: Google has made some moves that might cause a major global company like HP to have some concerns, such as the relationship with the Chinese government, for example, or competing with its own partners as it has with the Nexus One.

Since neither HP nor anyone else appears to know precisely what its Palm roadmap for the future looks like, it's fair to say that, at least today, nothing precludes it from continuing to produce the same iPaq phones it was planning to produce anyway -- continuing to support Windows Mobile 6.5, or maybe even making that Android phone, despite the risks. This doesn't have to be bad news for Microsoft, which some may have prematurely perceived as having lost another smartphone partner (after Motorola) to a competitive platform.

The formula HP perceives for its synergies with Palm, from an investors presentation April 28, 2010.

This is where NPD's Ross Rubin perceives a potential opening for Palm and Microsoft, which have partnered before -- at the time, rather successfully. Although that partnership began soon after Todd Bradley left Palm, HP's existing close ties to Microsoft certainly don't preclude the possibility of HP's bringing Microsoft back into the Palm picture.

How could it do that without kicking webOS aside? As Ross Rubin reminded us, Microsoft can make deals, and has made several already, with smartphone makers without binding them to Windows Phone 7.

"HP has a massive enterprise business, and it's very strong in several verticals in those industries. That's part of what is going to drive demand for some of these new kinds of devices. Todd Bradley said a lot of these devices are very new product categories, and it remains to be seen how they'll grow. But while BlackBerry certainly is very strong in the enterprise today...the Exchange group at Microsoft is willing to partner with handset makers other than those using Windows Phone 7 to compete with RIM. A great example of that is the partnership that Microsoft and Nokia have struck -- obviously, Nokia not using Microsoft's operating system in its phones, but using the Exchange ActiveSync architecture. Apple, of course, [is] using Exchange ActiveSync; and Palm today is using it. So BlackBerry very much remains in the crosshairs of Microsoft for a couple of reasons."

Extending Exchange ActiveSync technology to webOS would expand Microsoft's service presence to yet another platform (beyond the unbranded syncing ability that's already there). And services are where platform makers cash in; typically, native platforms are mechanisms for funneling customers to native services (see: iTunes), but if other platforms provide the same funnels, that's fine, too.

As HP execs conceded yesterday, they hadn't really thought about building up services for Palm -- for instance, a competitor to iTunes, or to BlackBerry's enterprise e-mail. With Microsoft's help, it wouldn't have to -- it could fill in the gaps necessary to make Palm competitive in the enterprise, so that its device offering won't look as limp and lifeless as the iPaq "Glisten." If HP can deploy ActiveSync e-mail, and implement a portal to something similar to Microsoft's Live mobile services, on the webOS cloud platform it's acquiring from Palm, perhaps with portals to Office apps and Zune.net...everybody's happy all of a sudden.

...Okay, okay, maybe we should have seen this coming.