HP buys Palm

Palm has been saved. Today, HP said it will buy the struggling handset maker for $US1.2 billion.

Palm has been saved. Today, HP said it will buy the struggling handset maker for $US1.2 billion.

Shares in Palm (NAS: PALM), which is 30% owned by Elevation Partners - aka the venture cap fund backed by Bono out of U2 - surged 27% in after-hours trading as news of the deal broke (a pop that actually took Palm's stock beyond HP's buy price, which represented a 23% premium. Some investors are obviously expecting a higher offer. Or are just not too bright).

HP shares (NAS: HPQ) fell.

I've always had a soft spot for smart phone pioneer Palm and its keep-it-simple approach (everybody says that, Palm has actually done it, mostly).

With its Palm Pilot, Palm invented the PDA (personal digital assistant). And with its Treo (originally developed by breakaway faction Handspring), it invented the smartphone - a category now dominated, of course, by iPhone.

The Treo ran on Palm's own Palm OS. A switch to Microsoft Windows coincided with the rise of competitors such as the iPhone and Nokia's N and E series, the rise and rise of RIM's BlackBerry line and, most recently, the emergence of Google Android phones.

With the Palm Pre, the company returned to running its hardware on its own, simplified operating system software, the well-regarded WebOS.

Ironically, the Pre, which gained five-star reviews in the US, has not been available in New Zealand because it runs on CDMA (the mobile network Telecom is in the process of phasing out).

And for all it's initial buzz, the Pre, and other new models, have not been enough to turn the company around.

Still, WebOS has caught Palm's eye. And with HP behind it, Palm should rise again. For any consumer who likes a little competition, that's a good thing.

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