HP buys mobile music company Melodeo

Computer giant Hewlett-Packard has acquired Melodeo, a Seattle-based start-up that specializes in music applications and services for mobile devices, the companies confirmed on Wednesday.

Terms of the deal weren't disclosed, but an anonymous source told TechCrunch that the price was around $30 million. The acquisition vaults HP into the battle for mobile music services.

I've written about Melodeo's products a couple of times, most recently in January, when I got a demo of a forthcoming update to Melodeo's Nutsie app for Android phones. Nutsie (the name is an anagram of iTunes) runs on several mobile platforms, and gives users a way to get music from the iTunes library on their computer to a mobile device over the air. Unfortunately, the current version of Nutsie only allows users to transfer iTunes playlists, not full libraries, and users can't navigate to single songs. It's more like Internet radio based on each user's personal iTunes library than true portability.

This was supposed to be fixed in the update I saw, which would let users upload their entire iTunes libraries to Nutsie's servers, then let Android phones access those full libraries over the air. Basically, Melodeo was building an online music locker, like what MP3Tunes offers. It sounded like a great solution for Android's weak spot in music, and I even speculated that Google might acquire Melodeo. But the updated Nutsie app hasn't come out yet, and when I contacted a spokesman about two weeks ago, he told me that Melodeo had some big news coming up that was delaying its product plans. This was it.

So what's HP going to do with Melodeo? My guess: it's going to build a music streaming service for the WebOS mobile device platform, which HP gained in its acquisition of Palm earlier this year.

All of the big mobile players are positioning themselves for a world in which consumers stream music from the cloud rather than downloading it directly to their devices. Apple bought streaming music company Lala in 2009 and shut the standalone service down in May, and it's reportedly in negotiations with record companies about using Lala's technology to build some sort of online music service. Google announced big music ambitions for Android at its I/O conference in May, including the acquisition of Simplify Media (which had an application for users to stream iTunes libraries directly from their computer to a mobile phone, with no online service in between), as well as plans to build an online iTunes competitor. Microsoft's Zune Pass subscription service is coming to Windows Phone 7 later this year, and the company could build a music locker service on top of SkyDrive, which offers 25GB of free online storage.

HP has technology called iStream for streaming music from its MediaSmart Server (based on Microsoft's Windows Home Server technology) to an iPhone. HP also teamed up with U.K.-based Omnifone in January to offer a subscription-based music service to PC users in Europe. But Melodeo ups the ante: HP now has the technology and people to help build its own online music service, competing with whatever the other big mobile players come up with.

The acquisition also has implications for smaller companies trying to come up with similar solutions, like HomePipe, which lets users stream music from their home computers to various mobile devices, and ParkVu, which just today announced its Music WithMe BlackBerry app that lets users upload iTunes music directly to their BlackBerry phones. Consolidation is underway, and companies like these may have to find a big benefactor to thrive in the coming mobile music battle.