Why Isn't Dell Bidding for Palm?

Looks like Palm (PALM) will change hands this week. The bidders are the usual suspects: Nokia (NOK) and Motorola (MOT) on the vendor side, and TPG and Silverlake on the Private Equity side. I am surprised that Dell (DELL) isn’t bidding, so I did some digging to see what’s going on and found this:

Here’s why, according to one insider familiar with the thinking: Ron Garriques, the former Motorola Executive VP of the handset business who had been opposed to the deal, left Motorola and is now at Dell Inc. (Nasdaq: DELL - message board). Motorola CEO and Chairman Ed Zander is currently running the day-to-day of Motorola’s handset business.

Zander has said that Motorola needs to get out of its low-end price war with Nokia and others and introduce more successful mid-tier and high-end models. “The Treo 680 is doing well, and it is exactly the sort of ‘feature-rich phone’ that Zander said the company needs to develop to get back some pricing leverage,” the source says.

Nokia is clearly winning the low end game and the emerging market wars. Just look at their 79% market share in India. And on the high end, Apple (AAPL) is putting pressure on everybody with their high profile iPhone. Indeed, Motorola is vulnerable and could use Palm.

But so could Dell.

Comments

[Tom B:]

Oh wow--spend big bucks acquiring Palm, then lose it all in a few months when the iPhone is released. The real question is why ANYONE is bidding..... If I were MOT or NOK, I would be hastily building really nice LOW END devices, because that market will likely remain competitive for a while-- until we get the "iPhone Shuffle", or something of the sort.....

2007 Mar 21 01:11 PM

[Echo To All:]

MOT needs palm the most. more so for the business clients. MOT is really the only other player in the position to go after RIMM and their biz clients, and can better utilize palm's client base. (iphone will not be in the corporate space, not yet anyway)

dell will just mess it up, as they did computers and handhelds. I don't see why private equity will enter this space. Too much innovation is required due to a very very short life span of a product. The most important aspect of PALM was the talent within its founder(s), but they are too busy with Numetra now.

2007 Mar 21 04:51 PM