A Chinese Buyer for Palm?

Posted by: Bruce Einhorn on April 12, 2010

Now that Chinese automaker Geely has agreed to purchase Volvo from Ford, will Palm be the next downtrodden Western brand to be swooped up by a Chinese buyer? That’s a possibility now that the creator of the Pre smartphone is, according to this Bloomberg News story and other news reports, seeking bids for the company. As they speculate about would-be buyers, analysts point to several companies from China that might want to grab the U.S. company as a way to jump-start their smartphone sales. Lenovo, the PC maker that has gotten back into the phone business in January after a two-year absence, is one. Huawei and ZTE, the two biggest Chinese makers of phone equipment, might also be interested.

Good luck with that. I’ve written before about the spotty track record of Chinese companies trying to grow globally through M&A. The best of the lot so far has been Lenovo’s purchase of IBM’s PC division in 2005 – and that’s not saying much. Lenovo is No. 4, behind market leader HP, Acer and Dell, and its global market share in the fourth quarter of 2009 was a respectable 8.9%. That’s thanks largely to Lenovo’s commanding position (33.5% market share) in its home market, though, something that the company didn’t need the IBM deal to achieve. Meanwhile, in the market where the acquisition should have helped the most – the U.S. – the company’s sales have slumped. Something to keep in mind in the days ahead as we hear more about the likelihood of a Chinese company trying to leapfrog to the top tier of the smartphone business by buying Palm.

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Reader Comments

JJW

April 13, 2010 01:50 AM

Pre or Palm-OS or whatever are going down the same path as UCSD-Pascal, CP/M, PC-DOS... to oblivion. Software-wise, there is nothing to gain for the buyer. Hardware-wise, nothing much the Chinese manufacturer hasn't already had. Brand-name, market-share? It's the whole point. Palm is dying! Let it die, China! Don't buy any more junks. Insist on buying something American are holding back instead. Or no deal.

Frank A NYC

April 13, 2010 09:10 AM

I think Palm would be a good play for Lenovo. They are back in the phone business, why not snap up a known name at a bargain price? The other option is Apple. They could buy Palm out of petty cash and eliminate a competitor, albeit a minor competitor.

Interconnect

April 13, 2010 03:08 PM

Sino Chinese marriage would bring a healthy family namely convergence. Huawei, ZTE are equal match to LUcent, Alcatel, and Northern Telecom. With growth which is in the region of China, Indo-Pak subcontinent, SAARC region, where today needs millions of smart phones which are converged in Chinese, and English as well.

Bama O'Husin

April 14, 2010 07:28 AM

It is good to palm off another dog to the Chinese. Anyway what the Chinese needed most is a recognisable Name.

rob

April 19, 2010 09:51 AM

Contrast the poor performance of Chinese firms buying Western companies... with the record of the Indians. Tata has already turned around Jaguar-LandRover, which is now profitable... something the huge and mighty Ford Motors failed to do over a decade.
Common democratic institutions, cultural affinity, proper institutions and rule of law... counts much more than bags of money achieved thru theft of intellectual property and oppression of slaves.


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BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.

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