HP/Palm: The once-fragmented tech landscape is unifying as category leaders snaffle up small fry and invade the turf of other former monoliths. As Hewlett-Packard’s $1.2-billion purchase of handset maker Palm shows, mobility is the emerging front line.
In a sense, it’s a return to tech’s origins where monolithic firms like IBM controlled everything from chips to software. Growth within many sectors has stagnated. And leaders within sectors have become so large that it’s hard to grow without straying into rivals’ turf. The hope is that they can earn a bit of extra revenue — and profit — by locking clients into their bundles of goods and services.
Just look at all the barriers breached: HP attacked Cisco in networking by acquiring 3Com; enterprise software firm Oracle now produces hardware thanks to its acquisition of Sun Microsystems; Cisco is producing servers and handheld video cameras; and nearly all the large firms have bought or started information technology consulting lines.
Mobile may be the biggest front of all. Each wave of technology typically generates revenue far in excess of the one it succeeds. So it's easy to see why so many fights are breaking out. For example, one-time allies Google and Apple have recently seen their friendship cool as they do battle - Apple jumping into mobile advertising and Google designing handsets to rival the iPhone.
HP doesn't want to be left out. It produces everything from servers to software for its clients. But the firm's mobile efforts have been stilted - its share of smart phone sales is nearly irrelevant. Buying Palm, with its highly regarded operating system, might change this. HP's financial muscle might be enough to give the stagnant standard momentum.
Moreover, it looks useful for all sorts of related and new mobile devices - for example, HP's efforts to take on Apple's iPad - and all the other companies itching to get into this space - suddenly appear more credible. Expect HP's rivals to launch counter-strikes soon.
