Amazon Said to be Bidding to Buy Palm from HP

Likely interested in its hardware prowess not WebOS

It seems that Amazon is just getting started with its hardware business. It just debuted its first tablet, the Kindle Fire, along with a new line of e-ink Kindle readers. But the latest rumor says that it's in talks with HP to buy Palm, the troubled smartphone and, more recently, tablet maker.

HP wants to get rid of Palm as soon as possible and, though there are several potential buyers, Amazon is the closest to closing the deal, VentureBeat reports.

The deal does make a lot of sense. Despite the popularity of its Kindle readers, Amazon is not a hardware company. The best example of this is the Kindle Fire, which was not designed in-house.

Lab126, the Amazon unit that handles Kindle hardware was too busy creating the next generation Kindle ebook readers to work on a tablet as well. So Amazon turned to Quanta Computer, an OEM and ODM that also helped RIM create the PlayBook.

And Amazon is just getting started with its 7-inch tablet, a 10-inch is said to be in the works, though it has been delayed. A smartphone is also a possibility.

The fact that Amazon had to outsource the design of the Kindle Fire to make the holiday season and wasn't able to have a 10 inch version at the same time underlines why it needs a hardware team with experience.

Which Palm definitely is. Amazon could leverage that kind expertise and build great tablets that leverage its main asset, content.

But there's a caveat, Amazon is likely not interested in WebOS. It built a custom Android version to power its tablet and will likely not abandon it in favor of something new.

That said, WebOS could provide the underpinning for the custom Amazon UI, which is what Android does now, so customers would have no idea whether they're running Android or WebOS underneath.

This could also help Amazon avoid any sort of legal or licensing issues that are plaguing Android hardware makers lately, including the mighty Samsung.

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