Windows Phone Thoughts: Sony will buy Palm

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Thursday, August 8, 2002

Sony will buy Palm

Posted by Jason Dunn in "THOUGHT" @ 09:28 AM

The funny thing about psychics is that even if they're wrong 99% of the time, people only remember the "amazing" 1% that they got right. So if I'm right about this, you'll all be amazed. If I'm wrong, you'll forget I ever mentioned it. Right? So here's my prediction...(I'm not the first one to suggest that Sony might buy Palm, but I haven't been truly convinced until recently):

Back in October 2000, I boldly (foolishly?) predicted that Palm would be a "smoking husk of a company" in 24 months. We're two months away from the deadline, and Palm is doing better than I thought. But they're not out of the woods yet, and the big bad wolf (share price) is stalking them. Today they were removed from the S&P 500 when their stock fell below 90 cents in after hours trading. They're now under the radar of the big brokers (have been since dipping below $5), and things can only get worse - they're trying a reverse stock split, which would turn ten of those 90 cent stocks into a single nine-dollar stock. It's a bold, but desperate move - from what I've read, it very rarely works long-term (Iomega is among the rare exception for a company that successfully did it).

So here's my prediction. The tax penalty for buying Palm after their spin-off from 3COM expired recently. I believe that Sony is waiting in the wings for Palm's stock value to get painfully low, at which time they'll make an attempt to purchase PalmSource (the software company). They could care less about the Palm hardware - they have better hardware anyway. They'll get PalmSource for a good price, and within 24 months they'll discontinue licensing the software to the other OEMs (despite initial promises to the contrary). Palm, Handspring, and all other licensees will have no OS for their devices and will be forced to develop their own or use Windows CE. Oh the irony.

Why would Sony do this? Because Sony stands to gain more from controlling the OS themselves than the few bucks they'd make from licensing it to others. It's also not Sony's corporate mentality to support competing products with an asset they would own. They would love to be the only Palm device on the market, and will squarely target the consumer - they don't care about the enterprise market.

So, by the fall of 2004, it will be Sony vs. the Pocket PC. There's my prediction. Thoughts?

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