Alec Saunders SquawkBox

Last week rumours circulated (again) that Nokia might acquire Palm.  Palm shares rallied, but seem to have settled back down this week. The “deal”, after all, is a Wall Street wet dream, and not much more. 

It’s true that Nokia’s stock price is suffering and that Nokia’s share is slipping in the smart phone market. The mobile market is in transition, and Nokia was ill prepared. Nokia is fundamentally a hardware company trying to become a software company in a market which has lurched sharply toward software as the core differentiator.  Wedded to Symbian while top competitors Apple and Google have bet on *NIX on the handset, Nokia knows it has to make some changes.  The advantages of a modern OS architecture on the handset simply can’t be overstated.

And, in fact, Nokia is making changes.  The N900 is a mobile Linux device, running Nokia’s home grown Maemo OS.  The N900 has debuted to mixed reviews but Nokia isn’t asleep at the wheel.

And that’s why the billions required to buy Palm aren’t going to get spent.

Who might make a good dance partner for Palm? How about:

• Yahoo – Apple and Google have both demonstrated the value of an integrated user experience connecting web based media and storefront properties to the handset.  By all accounts, Palm’s WebOS is the best platform for creating mobile web experiences today.  What better marriage than Yahoo’s deep web experience and Palm’s sexy new mobile platform?
• RIM – BlackBerry OS is long in the tooth, and everyone knows it. The current king of the smartphone hill has a lot to lose, and the current crop of new competitors have better platforms to build their future businesses upon.  Meld RIM’s deep understanding of the enterprise to Palm’s mobile web platform, and market it through RIM’s well entrenched carrier relationships and you’d have a winner.
• In fact, RIM acquiring Palm might be so threatening to Microsoft that they’d conceivably enter the race just to make sure that RIM didn’t win the big prize.  The shift to web technologies on the handset and within the enterprise would threaten Microsoft’s core franchise.  However, given how poorly Microsoft has executed on mobile, a successful bid from Redmond would likely be the kiss of death for Palm. 

My bet’s on RIM, even though a Yahoo / Palm marriage has the potential to create one of the most exciting and dynamic companies in the mobile world today.  Palm needs a dance partner, but it’s not clear that Yahoo’s leadership has the stones to get the job done. The good news for Palm’s Rubenstein is that there are plenty of potential suitors in the market, if indeed the company is for sale.

The title of Friday’s call was Small Computers vs. Big Phones, and the impetus was an issue of Mark Anderson’s Strategic News Service by the same name.  We talked about the coming “war” between smartphones and netbooks, computing in the cloud, and where the intersection between these devices might occur.

Many people expressed the opinion that we would likely be carrying multiple devices, depending on context, and thus were inclined to dismiss the idea that a war might be coming as hyperbole. 

Nevertheless, there’s certainly jockeying for position going on as TI prepares to ship 1W multi-core processors, operating system vendors duke it out, and the device manufacturers themselves battle for the hearts and minds of consumers. 

Friday’s conference call was recorded on Calliflower.  In attendance: Tim Panton, Carl Ford, Jonathan Greene, Brad Jones, Bill Volk, Jim Courtney, Doug Renert, Kim Dushinski, Barlow Keener, Sheryl Breukrer, Ken Camp, Todd Spraggins, Sergio Meinardi, Misha Nossik, and Aga Magdolen.

 

 Squawk Box Feb 27 [49:40m]: Play Now | Play in Popup | Download