HP has to put a lot of muscle into this. For them, it's not just going to be the $1 billion they invested, said Ernst. But HP boasts a impressive balance sheet and massive global scale, and the company made it clear that it planned to spend to resurrect Palm.

HP will help Palm. What (Palm's) lacking right now is the capital to stay in the game, said Avian Securities analyst Matthew Thornton. With HP you've got very deep pockets.

HP hopes its investments will spur developers into writing more applications for the webOs platform. As demonstrated by Apple, a robust offering of apps is key to success in the smartphone arena. Although Palm's App Catalog currently has more than 2,000 apps, that is dwarfed by Apple's App Store, which has closer to 200,000 apps.

Palm is home to a number of former Apple executives, including Chief Executive Jon Rubinstein, who was credited with helping to invent the iPod while at Apple. HP expects Rubinstein to remain with the company, and said its has a significant retention program in place to keep Palm talent in the fold.