Reports from financial wires suggest the potential marriage may be predicated on two twin but different needs: Nokia wants an Apple iPhone-class technology for its smartphones, while Palm needs financial clout to truly gain the chance to deliver on its own technological possibilities.
While neither company has been prepared to comment on these rumours, Palm stock climbed 10 per cent on early Nasdaq training (up $17.50) on chatter and claim.
A Palm purchase could also help Nokia strengthen its reach in the US market, where it is weak. The merger would potentially also help the surviving company compete with Apple’s iPhone.
Dollars and cents may yet undermine any potential deal. Analysts suggest Palm could cost the larger company as much as $3 billion, and at that price the inherent risk could outweigh any potential opportunity.
However, Nokia reportedly spends $3 billion a year on research and development, ten times Palm’s own R&D spend.
Whether these rumours are true or false, both firms will no doubt be considering fresh Barclay’s research released yesterday, which suggests Apple’s iPhone could grab as much as 35 per cent of the smartphone market in the enterprise and business sector within the coming years.
Barclays Capital said in a report, "Investigating Corporate Smartphones," issued yesterday, "We believe the iPhone should get its fair share of [the corporate wireless] market from consumers who want to use it for work as well as its industry-leading application marketplace and developer community that can create occupation-specific productivity tools," the report states.
What makes these rumours all the more interesting is that they emerge as Palm prepares to issue 20 million additional shares, aiming to raise $313 million through the sale, cash which will be invested in future product development. Obviously, any increase in value of these shares pending such a sale will be of potential use to the company.