HP-Palm Deal Looks Better With Time

Hewlett-Packard’s $1.2 billion acquisition of Palm last year suddenly looks smarter.

Google’s $12.5 billion deal to buy Motorola Mobility, and the earlier frenzied bidding for Nortel’s patents, have revealed the riches in mobile computing intellectual property. And HP snatched one of the most important troves for a price that now looks cheap. Yet, it could be challenging for HP to cash in. A big trove of patents allows the owner to demand royalties from rivals, prevent them from incorporating particular features or at least negotiate from a position of strength. On the simplistic metric of enterprise value per patent, H.P. paid about $750,000 for each of Palm’s roughly 1,600, in line with what Apple, Microsoft and the others did for Nortel’s collection. Google, meanwhile, paid slightly more than $550,000 for each of Motorola’s 17,000-plus patents. But all patents aren't created equal. For a time, Palm’s products dominated the market for personal digital assistants, precursors to today’s smartphones. The company also later developed an innovative operating system for handsets. So its patents sit in the mobile device sweet spot, whether related to displays, interfaces or other features. On average, those should be worth more than the wider range of Nortel’s or Motorola’s patents.