Mobile

Amazon has Palm in its shopping cart — will it click Buy? (exclusive)

Who will save what’s left of Palm from HP’s bumbling? It could be Amazon, as the online retailing giant is in serious negotiations to snap up Palm from HP, VentureBeat has learned.

A well-placed source tells us that HP is currently looking to rid itself of Palm as soon as possible, and that Amazon is the closest to finalizing the deal, among a handful of contenders.

Indeed, after yesterday’s announcement of Amazon’s Kindle Fire tablet, no other company seems as fitting a home for Palm and its webOS software. It’s worth noting that former Palm CEO Jon Rubinstein, who now holds a vague “product innovation” role at HP’s Personal Services Group, joined Amazon’s board late last year.

When asked for comment, an HP spokesperson said the company doesn’t comment on rumors and speculation. We’re still waiting to hear back from an Amazon representative.

The Kindle Fire is powered by Android, but it’s been heavily customized by Amazon to the point where you can barely tell. By purchasing the remnants of Palm, Amazon would have free rein to redesign webOS to its own liking, and it would be able to further differentiate its Kindle devices from the slew of Android tablets in the market.

And even though HP has given up entirely on its webOS hardware business after the TouchPad tablet failed spectacularly, there’s still plenty of potential for webOS to power a successful device. Palm’s mobile software was praised for its slick multi-tasking capabilities, which could allow future Kindle Fire tablets to juggle games, movies and media with more finesse than Android.

It also appears that HP has been eyeing Amazon for some time as a potential webOS partner. In an interview with This is my next in July, Rubinstein revealed quite a bit about having Amazon use webOS in its future tablets:

So, we’d like a partner that would allow us to expand the webOS ecosystem… There’s a variety of different sets of a characteristics to qualify as a good partner. I would say Amazon would certainly make a great partner, because they have a lot of characteristics that would help them expand the webOS ecosystem. As to whether there’s been discussions or not… that’s obviously not something I’m going to comment about.

HP paid $1.2 billion for Palm in 2010, but Amazon will end up spending a fraction of that if the deal goes through. Given just how badly the TouchPad failed, HP will likely offer what’s left of Palm at a major discount, especially since Amazon woudn’t be interested in resuscitating now extinct webOS hardware.

Personally, I’ve never had much faith in HP’s ability to effectively manage Palm and webOS. Amazon, with its commitment to long-term planning and innovative consumer devices, seems like a much better fit. And in a way, it seems fitting for the company that released the first widely-available $200 tablet to snap up the company that made PDAs, the precursor to the smartphone, a phenomenon.

Update: DealBook’s Evelyn Rusli explores how Amazon may be eyeing Palm’s patents with this potential purchase.

Graphic credit: Tom Cheredar


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