Copyright 1990-present Joe O'Shea, Jr.
O'Shea Communications

After years as a subsidiary, Palm shows promise as a parent
A profile of Palm's Mergers and Acquisitions Department


From the pages of PalmTree, Palm's corporate intranet

Palm, Inc.
AnyDay.com CEO Steve Watts, pictured here, shared Palm's vision, leading to Palm's acquisition of AnyDay.com.

By Joe O'Shea

When acquiring companies in the future, Palm can be counted on to be an understanding parent. After all, it wasn't too long ago that Palm was the white-hot startup, the promising company that had a long list of salivating suitors.

Palm was "adopted" twice in two years -- first by U.S. Robotics and then by 3COM -- before 3COM announced last year that it would spin off Palm. So, as Palm begins to fill holes in its strategic goal to define the mobile solutions space, its experiences as an "acquiree" will make it a kind parent.

"You need to have a strong rationale when acquiring a company, because when you acquire a company you inherit all its challenges and concerns," says Philippe Morali, who handles mergers and acquisitions as Palm's recently appointed vice president of Business Development. "When acquiring a company, we need to integrate the new firm into the Palm family and manage the relationship on an ongoing basis. That's why we must have a strong three- to five-year business plan in place for any new acquisition."

After Palm gained independence from 3COM in March, Philippe wasted no time in getting to work. In order to fill a pair of gaps in Palm's vision of a wireless handheld future, the company acquired both AnyDay.com and Actual Software, small firms located in Greater Boston.

AnyDay.com offers free online calendaring, scheduling and contact management, while Actual Software's MultiMail products are complete e-mail solutions for the Palm OS platform. The acquisitions also help Palm establish a strong presence on the East Coast.

Although mergers and acquisitions are common, especially in the ever-mobile tech industry, a good company goes to great lengths before pulling the trigger on a deal. A brief look at the Actual Software and AnyDay.com acquisitions provides the blueprint for Palm's approach to growing its business.

Initially, Palm's Business Development Group became intimately familiar with the company's strategic development plan. This spring, Palm's most pressing needs were in the areas of Web-based calendaring and e-mail. "The first thing we do is identify the gaps in our strategy," notes Philippe. "Once that's done, we decide how best to fill them."

Philippe and his associates then chose from three possible courses of action. The first option was to create the infrastructure and hire the resources needed to create a product. Option No. 2 was to partner with another firm. The third route was that of acquisition.

According to Philippe, there were three functionalities to be considered prior to acting:

How long will this process take to bring a product to market?
What are the resources available? How many people are needed to create a product?
What will Palm's ownership of a product be?

In order to fill both the online calendaring and e-mail holes, Palm decided to acquire promising young companies. Then, Palm analyzed all acquisition candidates by asking several basic questions:

  • Does the firm fill a particular gap?
  • Does it fit in with Palm's overall strategy and does ownership's philosophy dovetail nicely with Palm's?
  • Will value be created for Palm customers?
  • What are the cross-business unit applications?

When Palm examined the online calendaring market, AnyDay.com proved to be the best fit. The Cambridge-based firm already had the infrastructure and people-power in place to create a great product, and AnyDay.com CEO Steve Watts understood Palm's vision.

"Our Web calendaring will help Palm evolve from a PC-based planning model to a Web-based planning model," notes Steve Watts. "It will be a natural extension of their services."

Next, Palm tackled the e-mail issue. To produce wireless e-mail, Palm could either use Smart Code (a company purchased last year) or it could acquire a small online e-mail leader. Since Smart Code's time to market wasn't optimal, Palm opted to purchase Actual Software of Andover, located north of Boston.

"Wireless e-mail is why people want handhelds," says Philippe. "Actual's award-winning MultiMail line of products caught our eye, so we did the deal."

As Palm continues on its quest to remain the handheld computing leader, Philippe is developing a "virtual transition team" that will manage relationships with newly acquired companies. Headed by human resources manager Eric Larson, the team will consist of human resources, finance and information systems professionals.

"We'll continue to buy small companies, based on need, that will be distinct to our mobile-wireless strategy," says Philippe. "Palm provides tremendous brand equity for acquisitions. People are happy when acquired by Palm because we provide them with an opportunity to make a difference in consumers' lives."

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