That article is way off base and tries to fix too many problems with what it mistakes as one simple solution that is anything but.
The last thing the mobile industry needs is consolidation of OS developers. We've only got 4 (Apple, MS, Google and Palm - sorry symbian folks, but you've been relegated to the cheapie bin). If Microsoft were to give up on the Zune (which I dispute as a foregone conclusion), buying Palm does not solve that. What MS should do, and what I think is clear from the following screenshots MS is about to do, is roll Zune into the phone OS:
WinMo 6.5 Touchscreen (aka titanium)
Zune HD Touch Screen
It's becoming more and more clear that WinMo 7 will continue down this path and be an integration of the two. There - one problem solved.
So that, according this article leaves MS with a second problem - no hardware provider for an MS branded phone. But why does MS need a hardware provider? They have always been the biggest software maker in the world, and with the exception of the Xbox/Xbox 360, they have generally been poor at their attempts to release their own hardware. Their problem has always been that they can't survive as a hardware only company because they make most of their money by licensing it's software to other companies. Why leave that business model? There's no incentive in it for MS or the consumer when it comes to phone OS.
Now, suppose, just for the sake of playing this out, that MS does decide that they need their own hardware in the phone business. Why Palm? You overpay for OS developers who are on a completely different track than you are (WebOS is a different platform than WinMo). If you only need a hardware provider, MS would be much better served by contracting with HTC to provide a MS branded phone. It would cost half as much, it's already used to your platform, and they're putting out the most innovative hardware on the market (sorry Apple folks, but the iPhone hasn't changed its appearance in 3 years now, to where HTC has a new phone every 2 months or so).
So there you go. A much simpler and cost saving solution:
Roll Zune into WinMo, if you need hardware contract with HTC.
For the record, I don't think Palm needs to be bought, but if anybody should buy Palm, it's Google. HTC is selling better phones for Android than the Google "branded" ones, and since Google doesn't license the Google Brand on software that has been altered, eventually they're going to need their own hardware for control purposes (unless they take the MS approach - we don't need hardware, we just want OS credit). Palm is a stone's throw from Google HQ, and WebOS and Android are much closer platforms for development.