Why Cisco Will Buy Palm
Bloomberg reported today that Palm is up for sale, resulting in a flurry of articles citing HTC and Lenova as two of the most likely bidders. It certainly wouldn’t surprise me to see HTC pick them up just to bolster their intellectual property portfolio and help solidify HTC’s bid to be the leading anti-Apple. However, in the spirit of US Robotics acquisition of Palm back in 1995 and attempts by 3Com to integrate Palm after they merged with USR in 1997, I think there’s another bidder out there who can and should grab Palm while they can: Cisco.
[UPDATE: Later in the day yesterday outlets began reporting that Cisco is on the list of companies that have, in fact, made a bid for Palm. Others include HTC, Lenova, and Dell. Since then, there’s word that Lenova has walked away.]
Here in no particular order are the reasons I think Cisco will make a bid for Palm, and why I think they just might be the highest bidder:
Cisco’s Consumer Aspirations – With their acquisitions of Scientific Atlanta (set top boxes), Linksys (consumer grade networking hardware and VoIP solutions), and Flip (flash memory video recorders) Cisco has made it clear they’re moving into the consumer content production and delivery device business. Acquiring Palm would give them yet another delivery device line, the underlying operating system, and hand-held hardware expertise.
Carrier Relationships – Just as the Scientific Atlanta acquisition gave Cisco a seat at the table with cable companies and Linksys solidified their position with traditional ISPs when it comes to the residential “last mile”, acquiring Palm gives them similar connections with Sprint, Verizon, AT&T, etc. This will be important not only with respect to handsets, but as Cisco tries to compete with network access devices like the Novatel MiFi, Sierra Wireless Overdrive, and similar devices from Motorola.
WebOS – Beyond the basic intellectual property portfolio that would give Cisco a stack of chips in the mobile device patent game, Palm webOS could serve as the basis for a wide variety of touch screen devices from Cisco in a number of form factors: VoIP phones, coffee table media devices, or future Flip devices, for example.
Talent – It’s five miles from Palm’s campus in Sunnyvale over to Cisco’s headquarters in San Jose. Picking up Palm is a great way to get a local pool of handheld system design and engineering talent—including a large pool of ex-Apple talent—for use on any number of Cisco projects, but particularly portable consumer devices.
Deeper Pockets - HTC’s market cap is $8 billion. Lenova’s is $55 billion. Cisco’s is $152 billion. If it comes down to a bidding war, Cisco takes it.
Vindication – Ken Wirt, Cisco VP of Consumer Marketing was SVP or Worldwide Marketing for Palm from 2001 to 2006. As one of the many Palm executives left by the wayside as Palm has struggled to find a winning game plan, you’d have to think Wirt would appreciate the opportunity to show what Palm could be with the resources of a parent company like Cisco behind it.