HP Gets Its Hands on Palm

You used to run Palm (PALM), and walked away in 2005. What has changed? What is it about the company that attracts HP now?
Our focus as we looked at Palm was to further enhance our smartphone position. We looked to acquire them for the webOS, their broad patent portfolio, and broadly deploy devices around the webOS. As our customers are moving more and more into this connected world that they're all creating, they will be looking to HP to deliver products and services that meet that need.

Which was more important, Palm's webOS software or its patents?
Clearly, webOS and its ability to offer great multitasking.

Some analysts were saying Palm was worth nothing.
And some people said it was worth $14 a share. We paid $5.70 a share. We judged our willingness to pay based on the opportunity.

When did you start looking?
They're one of many [companies] we look at over time. We always track competitors and our opportunities.

Will webOS replace Windows on all of your smartphones?
Microsoft (MSFT) will continue and will always be a huge strategic partner for Hewlett-Packard (HPQ). Our focus is to create choice for customers around those products and services that will allow them to connect to the information they need as quickly and as safely as they can.

Palm is a consumer play. How much room is there to expand there?
I've always thought Palm has always been a "prosumer" play. We see opportunity in our channel and in enterprise sales. It will be our job to connect to that information that's critical, in any segment.

Analysts are saying this acquisition was in response to Apple's growing influence. Was Apple a factor?
We do acquisitions that are based on our own strategic growth plans. Clearly the segments that Apple's (AAPL) moved into are fast-growing, but so are ours. We've done this acquisition because of the capabilities that the webOS brings.

How hard do you think it will be to integrate Palm's culture with HP's?
It's been many years since I was involved in Palm. My focus is on creating awesome connected products. The software development team is very important for us. We incented them. [CEO] Jon Rubinstein has agreed to stay on at HP. That will be a big help.

Do you consider this a coup for HP?
This is going to make HP even bigger than it is today. I think of it as a very strategic acquisition with lots of upside for Hewlett-Packard and our customers.

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