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Asian Companies are Better Off Without Palm

Posted by: Bruce Einhorn on April 29, 2010

After lots of speculation that a Chinese or Taiwanese company would buy Palm, the struggling smartphone maker is about to go to Hewlett-Packard. And investors in companies like Lenovo, ZTE and HTC should be relieved, according to Sandy Shen, research director of mobile devices and consumer services for Gartner in Shanghai. I spoke to her last week, as talk about an Asian buyer was growing louder. “I don’t think any of the companies should buy Palm,” she said then. “There’s not much left; I don’t know what value any buyer could get from Palm.” Yes, Palm has its operating system, webOS, but that would be of limited value to Taiwanese and Chinese companies that are focusing their efforts on Android and Windows Mobile. “It doesn’t make sense for them to take on a third OS. If you want to be a strong player in smartphones, it’s better for you to specialize.”

What about Peter Chou, the chief executive of HTC, saying (as he told me recently) that the company needed more scale? “Palm’s not going to be giving them any scale, it’s too small.” There might be some logic behind Lenovo buying Palm, since the American company was an early mover in China with the Treo. Even though Palm’s presence is now trivial, “Palm still has some brand recognition and followers in mainland China,” said Shen. “If Lenovo could use its marketing muscle, there might be a possibility for them to have Palm as a meaningful player in China. But outside China it would be just very difficult for Lenovo to have a meaningful market share.” The Palm brand value in China is shrinking, though. “The window of opportunity is closing fast. Now everybody is just talking about Android and iPhone.”

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Bloomberg 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.

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