Is HP's Palm deal as bad as the Compaq buyout?

I'm putting the HP buyout of Palm in the "What were they thinking?" category. Palm has been struggling to stay alive while competitors like Apple, Blackberry-maker RIM, and makers of Android devices have been thriving. This looks as badly thought out as the Compaq buyout.

HP executive vice president Todd Bradley had this to say about the deal according to the Mercury News:

"The smartphone market is large, profitable and rapidly growing. Palm's innovative operating system provides an ideal platform to expand HP's mobility strategy and create a unique HP experience spanning multiple mobile connected devices."

Or course, you might expect Bradly to say that --- he is Palm's former CEO.

Bradley is right that the smartphone market is a fat one, and getting fatter all the time. But spending $1.2 billion to buy a slowly dying company whose phone operating system has a miniscule market share isn't the most cost-effective way to break into it.

Palm's WebOS is being beaten, and being beaten badly, by the Blackberry, Android, and iPhone. Waiting in the wings is Windows Phone 7. Things were going badly enough for Palm. But now they could go worse, because any time there's a merger, it takes at least six months, and possibly a year or more, for the dust to settle and the merged companies to begin to operate effectively together. HP doesn't have that time; the market for smartphones is beginning to solidify.

I don't expect Palm's WebOS to survive; instead, I'm guessing that HP's phones might end up with an Android operating system. If that's the case, what is HP buying for $1.2 billion? Some manufacturing know-how, tiny market share, and smartphone expertise. They could have bought that for much less money.

Carly Fiorina, former HP honcho, will forever be remembered for the botched Compaq buyout. Current HP Chairman Mark Hurd, despite the remarkable works he's done to turn HP around, may be remembered as the man who overpaid for Palm.