Potential Palm Takeover May Threaten iPhone

Unnamed sources have claimed that Treo maker Palm Inc. may be up for sale, and could likely be acquired by one of its rivals. As a result, this may give Apple's iPhone some trouble.

Although four companies are said to be interested in the Palm purchase, including two private equity groups, the two front-runners of the acquisition are Motorola and Nokia. Such an acquisition could re-shape the cellular phone market. (Source: appleinsider.com)

If Mortorola bought Palm, it would establish itself as the single largest supplier of Windows Mobile devices. This position could lead to an elimination of some competitors in the market. If Nokia was shut out of the market, there would be only three competitors left, making Apple an attractive target. The informant of the reported acquisition said, "If they own Palm, all of a sudden Motorola becomes Microsoft's best hope for competing against RIM and Apple." (Source: appleinsider.com)

A major Palm shareholder, who asserts that Morgan Stanley has been enlisted to sell Palm, also noted the detrimental effects that an acquisition by Mortorola could have on the iPhone.

"Apple is about to walk away with the OS market for handheld computers. Microsoft has been successful because it's always owned the OS. In some ways, the iPhone is a Trojan horse, a handheld computer running the Mac OS that's poised to take over the world." The shareholder also added that if Motorola was to acquire Palm, the company would be better positioned with Microsoft, and the new duo could form a stronger position. (Source: cnbc.com)

Not everyone is as loose-lipped about the potential acquisition. Representatives for Palm and the four potential acquirers have all refused to comment on what they deem to be "rumors." (Source: pcworld.com)

Further, industry analysts have also expressed their skepticism of an acquisition. Craig Mathias, an analyst at Farpoint Group, doubts that either front-runner will purchase Palm. "Moto may have some need, but I have been convinced by sources that Moto is not going to happen," he said. "Nokia is a very, very different platform. Palm just doesn't fit." (Source: pcworld.com)

If the sale of Palm is indeed true, the confirmation of the rumors may not be too far away. Many anticipate an announcement shortly after Palm reports its third-quarter earnings. (Source: pcworld.com)