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Pro and Con: Should Apple Buy Palm?

Pro and Con: Should Apple Buy Palm?

by , 4:15 PM EST, December 19th, 2005

Acquisition scenarios are all the rage these days, with many Internet pundits speculating on what company Apple should buy, or vice-versa. Brett Arends, writing for the Boston Herald on Monday, believes Apple CEO Steve Jobs should "take advantage of his soaring share price to open up whole new fields of growth" and buy Palm. However, O'Reilly Network columnist Fraser Spiers disagrees with him.

Mr. Arends' reasoning is that "iPods are not quite as invincible as they look," arguing that Apple's refusal in the 1980s to license the Macintosh operating system is similar to the fact that iTunes Music Store purchases will play only on an iPod.

With Palm's current net value of US$1.1 billion, Mr. Arends reasons that Apple could spend 2% of its shares to make the purchase "but immediately add 10% to sales and gross profits." In addition, while the iPod is "the must-have product for Christmas 2005," the deal would give Apple the must-have gift for later holiday buying seasons.

Not So Fast

While Mr. Spiers agrees that Apple should produce a PDA, he doesn't see the point in the company acquiring Palm. He sees "very little difference" between the Palm OS of 1999 and the one in use today and would rather see Apple put its expertise into creating an "end-to-end experience" in a PDA of its own creation.

Mr. Spiers also argues against device convergence in the form of a PDA/MP3 player/camera/cell phone/whatever. While he doesn't like carrying multiple devices when he travels, he sees such an all-in-one gadget "consolidating [bulk] into one bigger lump instead of two or three smaller ones."

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