BargainPDA is reporting that RIM is mulling over the thought of buying out Palm. They state that the reasoning behind the move is due to RIM’s patent litigation troubles. That if the case were to be decided against them, their entire business would effectively be shut down, killing the Blackberry technology. Owning the Treo line would allow them to survive and rebuild.
In theory RIM has plenty of money to buyout Palm being valued at $2.6 billion compared to Palm’s market cap of $950 million. But put this rumor in the “my-website-needs-traffic-so-im-going-to-spread-far-fetched-rumors” category. It doesn’t make sense for RIM to buy Palm, especially when RIM’s co-CEO Jim Balsillie has already went on record and stated they have a work around,
“Part of what we have done is a workaround. We’ve completed it. We’ve tested it and we have a legal opinion on it, so it’s an option… So the architecture of it, and I’ll give no more comments beyond this, works for all BlackBerrys out there.”
Another reason is RIM is trying to avoid becoming a hardware company, so buying other hardware technology doesn’t make sense for them. They are trying to avoid the bleeding-edge hardware race, because they know they can’t win against companies like Nokia and Sony-Ericsson. Look what happened to Palm in the PDA market, once the dominant player it has now seen its market share shrink thanks to the likes of Microsoft, HP, and others. Hardware sales may account for 70% of RIM’s entire revenue but make no mistake RIM is a software/service company first.