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Now that everybody's rightfully soured on the idea of Dell buying Palm, the worm has now turned to Microsoft.  The facts of Palm's current state help make the case: the Pre is by most accounts a success so far and Palm is by most accounts not exactly flush with cash. Add in that a lot of other companies with a lot of cash (to wit: Microsoft) are having trouble in the mobile space and you have a natural recipe for takeover speculation.

It's all speculation that I think is dead wrong.  I'll explain why, after the break.

David Carnoy of CNET comes in with a nice roundup of the latest set of analysts talking about a Palm takeover, this time by Microsoft. 

Personally, I think a Microsoft-Palm marriage would be a win-win for both companies and that it should happen sooner rather than later. But as it stands, we'll likely have to wait a year or more for things to shake out and for a clearer picture to develop. Toward the end of this year, we may see a beta of Windows Mobile 7, Microsoft will release the Zune HD (some Zune user interface elements may me integrated into WM7 or vice versa), and we'll see what new handsets and carrier relationships Palm has up its sleeve.

David Coursey of PCWorld thinks Microsoft should do it for sure, as does Farhad Majoo of Slate. All three make excellent points, but the bottom line is that there are a few gigantic roadblocks to this deal.

The OS that Runs Your Phone Runs Your Company Philosophy (& Vice Versa)

I think that Microsoft really does have some great things coming with Windows Mobile 7 and whatever the mysterious Project Pink is.  Microsoft's next big mobile plays are a ways off, but they are coming. Microsoft has their mobile playbook written and from what I can tell, except for the delays-of-game, it's the exact right one for them.

I have a somewhat difficult time thinking of any company that would "get" webOS in the way that Palm does.  WebOS is the magic bullet for Palm, but that doesn't mean it would be the magic bullet for anybody else. For webOS (or any OS, come to think of it) to be successful, it needs to built into the very DNA of the company behind it.

Do you really think that Microsoft could get the HTML5, AJAX, Javascript, and open source Linux pieces of webOS into their DNA?  As I said earlier, I'm still optimistic that Microsoft will be resurgent in the mobile space next year, but they're going to do it their way.  Trying to do it Palm's way is a flat-out bad idea.

Were Microsoft to buy Palm, from where I'm sitting the best thing they could do is throw Palm a bootload of cash for R&D and manufacturing, then get out of the way.  That is, of course, if Palm wants the extra cash.

Palm. Is. Not. For. Sale.

The thing that these takeover stories don't include: Palm. Is. Not. For. Sale.  I'm trying to imagine the scenarios in which Palm gets purchased:

• Roger McNamee and Bono will get huffy and use their share of Palm to force a sale, despite every public statement McNamee has made and despite the fact that former Palm CEO Ed Colligan sits on Elevation's board. Colligan, having been a huge proponent for Palm's independence, changes his mind after too many hours under the influence of McNamee's "golden tongue."
• Robbie Bach at Microsoft will suddenly scrap years and years of work (both visible and as-yet unseen) on their mobile projects, then willfully ignore the advances made in WinCE's codebase, the UI advances in Zune, and the partner relationships with HTC, LG, Samsung, Sony, et al ...so he can have one of Microsoft's premier products, their Mobile OS, run on Linux.
• Palm successfully fends off Microsoft's bid at a hostile takeover only to have Steve Jobs use Apple's gigantic pile of cash to buy Palm just so he has the pleasure of firing all his former employees--and kill the Pre iTunes sync once and for all. (Oops, sorry, was riffing there)

There are just too many roadblocks here - in the culture and in the code.  The two, as I said above, are linked.

No, every indication is that Palm is serious about being successful on their own.  The platform they're building with webOS deserves to have a place in the market. Frankly, the only question is whether or not Palm has the resources and the proper management to secure that place.

Palm has made some colossal managerial mistakes in the past (some of which were only clearly mistakes in hindsight): losing their braintrust to Handspring, splitting off PalmSource, Cobalt, failing to drive innovation on the the PalmOS, the Foleo. Now, though, they seem to be firing on nearly all cylinders.  The new Apple Ex-Pat team (with a new SVP who also has Apple experience, by the way) is focused and moving quickly in the right direction.

So it comes down to resources, to cash.  Palm says that they have enough resources to do what they want to do and (for now) I believe them.  If Microsoft bought Palm, I fear that the strings attached to the added resources would inevitably wind their way around webOS's neck and strangle it.

A buyout may need to happen someday if Palm runs out of cash. For now, though, I'm content to see this thing play out. Palm has been involved in too many splits and mergers over the years and not very many of those deals turned out well.

Keep yourself off the auction block, Palm.