Palm's future in the smartphone market remains uncertain, but its technology could prove valuable to Research in Motion (RIM), makers of the popular BlackBerry smartphones -- especially as RIM continues its consumer push.
Reading David Coursey's InfoWorld post "Palm is doomed; let the good-byes begin," I couldn't help but wonder what's next for Palm. As mentioned by Coursey and the Wall Street Journal, Palm has released strong products since relaunching on the WebOS platform, and it enjoys excellent carrier support. Yet this hasn't helped Palm's share grow:
In the nicest way possible, it (the Wall Street Journal) says Palm, with a mere 0.7 percent of the smartphone market, compared to 14.4 percent for Apple and 20 percent for RIM, simply can't catch up.
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Being acquired by RIM is definitely one answer to the "what's next for Palm" question. There is, however, the slight issue of Palm's $1 billion market cap putting a serious dent in RIM's $1.3 billion cash and near-cash position. However, RIM doesn't have any debt, so there's room to finance the acquisition. RIM's stock, while not priced where it's used to being, remains on most investor's tech stock short list and could help fund the acquisition. For our purposes, let's assume RIM could close the deal.
The larger question is "Why would RIM want to acquire Palm?"
Palm's 0.7 percent market share isn't reason enough to acquire Palm. RIM could get its share of that 0.7 percent as Palm users look for future devices from Apple, RIM, or Android phone manufacturers.
One reason to acquire Palm would be to leverage Palm's open source experience. I've argued that RIM could benefit from using open source more effectively in its business. Palm would jump-start this effort.