Recent reports that Nokia Corp. is in talks to buy Palm Inc. surprise some analysts, who nonetheless said some type of buyout might make sense and could even be a good thing for customers. According to news reports, the pioneering handset maker has been talking with possible suitors and Nokia has emerged as the frontrunner for an acquisition, though investors might simply take the company private. Earlier reports said Motorola Inc. wanted to buy Palm.
Palm is profitable and increasing sales but faces tough competition and has stumbled recently. It has sold fewer devices than analysts expected in recent quarters, in part because of delays in getting products out, said Casey Ryan of Nollenberger Capital Partners in San Francisco. New products from Research In Motion Ltd. and other rivals have also eaten into Palm's market share, Ryan said. The whole high-end phone category is drawing many new entrants with flashy devices, including Apple Inc. with its iPhone. Palm was instrumental in creating the market for PDAs (personal digital assistants) in the 1990s but has moved with the rest of the handheld business to devices that can also be used as phones. Its Treo smartphones, which come with either the Palm OS or the Microsoft Corp. Windows Mobile platform, are now Palm's bread and butter.