HP-Palm faces uphill battle in Europe

Lack of brand awareness will be a tough challenge, according to an analyst

A merged Hewlett-Packard and Palm will have a long way to go before it can challenge the likes of Nokia, Apple, Research In Motion (RIM) and HTC in the European market, according to analysts.

Lack of brand awareness for Palm in the European market will be one of the biggest challenges, according to Roberta Cozza, principal analyst with Gartner Research. That's a result of Palm's decision to spend most of its limited resources in the U.S., and the vendor is now not known outside of tech circles, according to Ben Wood, analyst at CCS Insight.

However, HP's acquisition can only be a good thing, but it is starting from a very low base when it comes to Europe, Wood said.

Palm's smartphone market share in Western Europe was only 0.2 percent during the last three months of 2009, compared to 4.3 percent in the U.S, according to Gartner. In Western Europe, Nokia, Apple and RIM were the three largest smartphone vendors during the fourth quarter, according to Gartner.

Support from operators will be an important part of a European resurgence. In Europe, Telefonica-O2 has been its biggest supporters -- the operator sold the original Palm Pre and will sell the Pre Plus and Pixi Plus in several countries -- and it welcomes the proposed deal. A stronger Palm will be good for the smartphone market, and give WebOS a boost in terms of investment and scale, according to a statement sent via e-mail.

That sentiment is echoed by Palm in Europe. If the deal goes through, it will bring the resources to allow Palm to scale faster, according to a spokeswoman.

However, to be able to compete in the cutthroat smartphone sector, an application and content ecosystem to go with the products has become critical, according to Cozza, who isn't convinced that Palm, even with the help of HP, can build an ecosystem to rival its larger smartphone competitors.

HP-Palm will have a better chance at competing in the burgeoning slate PC market, which isn't as fully formed as the smartphone segment, according to Cozza.

Still, HP's decision to do something different and not just go with Android, like its arch nemesis Dell, is a "ballsy" move, according to Wood, and if it wanted to spend big on building a smartphone brand HP has the war chest to do it, he said.

HP Europe didn't return calls for a comment.

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Mikael Ricknäs

IDG News Service
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