Palm Pre and Microsoft: a Mobile Marriage in Their Future?

We can debate the merits of this statement but it's arguably the case that Palm's WebOS and Pre handset are the first truly worthy rival to the iPhone. Google and Microsoft would undoubtedly object to that. Unfortunately I wasn't able to see Windows 6.5 in action at CTIA so I can't say firsthand whether it represents a significant advance over 6.1. While generally regarded as an improvement over 6.1 in the reviews I've seen, it's also largely seen as a stop-gap measure until 7 can come out next year (probably late next year).

Back to the Pre. There are way too many expectations for the new handset. It will be a success but probably not at the level to meet the over-hyped expectations and those expectations create problems for Palm and its market valuation. If initial Pre handset sales don't put the company on an express train toward higher revenues, investors will probably say goodbye. 

But that creates a buying opportunity for someone like Microsoft. Windows Mobile has been around for a very long time and there are millions of devices that run it, with Samsung, LG and HTC, among others, committed to release millions more Windows Mobile devices in the near future. (One Windows Mobile device that looked cool but offered a disappointing experience in my short time with it at CTIA was the Samsung Mondi.)

But Microsoft is in unfamiliar territory with Windows Mobile now. Its desktop monopoly isn't helping it in mobile and the rise of RIM (the enterprise leader), the iPhone (the consumer leader) and now the open-source Android (the worthy insurgent) threaten to squeeze the OS and potentially marginalize it over time. Rather than the iPhone or RIM, Android may be the real threat to Windows Mobile longer term.

Redmond would need to swallow its pride in seeking to acquire Palm and that may prevent a serious look at the struggling company. It would be an admission that Windows Mobile isn't sufficiently competitive. Microsoft engineers absolutely believe not only that their product is competitive but also that it can win in the mobile space.

However I believe that if Microsoft wants to be truly competitive it needs to take a close look at potentially buying Palm. Microsoft might not want to be perceived to be competitive with its OEM partners via such a move. But it could incorporate WebOS or just swap out most of Windows Mobile for WebOS and not make hardware devices. 

Will Microsoft acquire Palm? I doubt it. But if not, the company needs to take some dramatic steps in the near term to ensure that it doesn't become a kind of also-ran in mobile. 

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Related: RIM posts dramatic results, says now there are 25 million BlackBerry subscribers.