Hewlett-Packard buys Palm for $1.2 billion

Unable to compete against the likes of Research in Motion and Apple on its own, Palm is selling itself to one of the biggest manufacturer of desktops and servers:

Hewlett-Packard Co., the world’s biggest personal-computer maker, agreed to acquire Palm Inc. for about $1.2 billion, stepping up efforts to compete in the smartphone market.

The price of $5.70 a share represents a 23 percent premium over Palm’s closing price today. The transaction should be completed by the end of July, Palo Alto, California-based Hewlett-Packard said in a statement.

To date, H.P. has been unable to make much headway in the smartphone market on its own, while Palm, despite introducing several innovative devices, has struggled to compete due to a lack of resources. Since each party can solve a problem that the other has, this is one acquisition that probably makes sense.

Last year, Palm tried to reinvent itself by introducing the Pre and Pixi handsets, which shipped with the new webOS operating system. Palm built webOS on top of the Linux kernel, with a number of free software libraries, adding a number of proprietary components. Essentially, all they did was customize their own GNU/Linux distribution without giving back to the free software community by releasing their own work under the GNU GPL.

Although Palm's new phones and webOS were praised by many critics, and sales have been decent, the platform has not proved to be as popular with users or developers as Research in Motion's BlackBerry, Apple's iPhone, and Google's Android. Palm probably wouldn't have stood much of a chance competing against those platforms and Microsoft's forthcoming Windows Phone 7 on its own.

Now that Palm is part of Hewlett-Packard, it at least doesn't have to worry about its own future anymore. Its fate is intertwined with one of the technology industry's biggest behemoths, which sells a diverse mix of products and services.