Lenovo, the fourth largest PC maker in the world, became the leading candidate to buy U.S.-based Palm after HTC, the world's fifth ranked smart phone brand, decided to not pursue the takeover after reviewing Palm’s books.
Lenovo, who made headlines in 2005 with the purchase of IMB’s PC business, does have a smart phone in their product line that is presently offered in China. However, the company has no presence in the U.S. market, which remains the top smart phone market in the world in regards to the number of users.
Skeptics of a Lenovo takeover contend that using Palm as a gateway into the U.S. would mean that Lenovo would be faced with the daunting task of competing with industry leaders, such as, Apple and Research in Motion. In order to have any kind of success, the critics point out that Lenovo would have to dedicate additional resources into the marketing and product development within the U.S. while attempting to build market share in China.
On the other hand, a Palm acquisition would give Lenovo an established brand within the U.S., as well as, one of the best operating systems in the industry. Additionally, Palm has already penetrated the Chinese market where it has introduced the Palm Tungsten™ T, Zire™ and m500 handhelds.
With China being the largest smart phone market in Asia (68%), China might actually provide Palm with a plan-b in case none of the suitors actually place a bid. This may prove to be the reality for Palm as the majority stockholders still maintain the $1 billion asking price for the company.
As a pioneer in the smart phone market, Palm helped to define the industry. Despite the early foothold in the market, the company has failed to sustain growth. While analysts are hesitant to write off the company, they agree its future is in doubt.
Disclosure: No Position