Palm Inc. needs money to survive. Dell Inc. needs a handset business to compete. I think Dell should acquire Palm immediately. The union would benefit both companies, as well as investors, the industry and, most of all, users.

After years of wandering in the wilderness, Palm finally did the right thing. It completely restructured the company for innovation, changing executives, engineers, operating systems and even core assumptions about how a cell phone handset should operate. And finally, it replaced CEO Ed Colligan with former Apple Inc. executive Jon Rubinstein, who headed the development of the iPod.

Unfortunately, all this came two years too late. As a result, the company is not likely to survive as an independent company.

I predicted this fate way back in early 2007 (” The decline and fall of the Palm empire”) when the company was still profitable and the economy wasn’t in recession.

In that column, I wrote:

“The tragic story of Palm’s fall from greatness is a history of squandered resources and misplaced effort… Palm merges with another company only later to be spun off. The company ignores the founders’ direction, only to later acquire their start-up and take up its direction. Palm spins out the software division only later to buy back the rights to it. Palm gives up the Palm trademark only to later buy it back. How many times has Palm distracted, divided and plundered the company with spin-offs, acquisitions and mismanagement?”

Palm would benefit enormously from Dell’s corporate culture, which is competitive, disciplined and, above all, consistent. As part of Dell, Palm could continue its trajectory with the Pre, the now-threatened “Pixie” project (which is a low-cost candy bar phone that runs Palm’s WebOS and could sell for $99 or less) and the WebOS itself, which has enormous potential.

Palm needs the time to cultivate a developer community and ecosystem around the WebOS. It needs power and influence over Asian parts manufacturers and U.S. retail stores. Above all, Palm needs somebody to pay the salaries and electric bill until the new direction can bear fruit.

So what’s in it for Dell?

Dell has a serious case of handset envy. Apple, of course, has the iPhone. HP has the iPaq. (No, I’m serious. The iPaq still exists!) Acer acquired E-TEN, and should be shipping an Android cell phone in November. Lenovo is working on an iPhone-like Android device for the Chinese market. Toshiba makes a range of Windows Mobile handsets.

In fact, Dell is the world’s only major PC and laptop manufacturer to not offer a cell phone of any kind.

Back in January, rumors were flying that Dell would launch a new Android-based handset at Mobile World Congress. In late March, reports surfaced that carriers and others who saw the Dell prototype were disappointed by it.

The last thing Dell needs is another embarrassing fiasco like its pathetic attempt to enter the media-player market. In the wake of the stunning success and dominance of the Apple iPod, Dell came out with a line of me-too, ho-hum music players called Dell Digital Jukebox and DJ Ditty.

Dell simply doesn’t have the design culture to produce a cell phone even approaching the Palm Pre — let alone the iPhone — in coolness, simplicity or appeal. The only way for Dell to be a serious player in the handset market is through acquisition.

Palm is the perfect acquisition for Dell. The Palm Pre targets exactly the kind of enthusiastic technical power user that already likes Dell laptops and PCs. The Pre isn’t a dumbed-down consumer phone, a boring-as-wood business phone or an also-ran Android phone. It’s the perfect flagship handset to launch Dell into the global handset in a big way.

Palm also has a strong legacy in business, which fits with Dell’s positioning.

But most of all, Dell needs a multitouch operating system.

As I’ve said many times before in this space, the future of both desktop and laptop PCs is an iPhone-like multi-touch user interface. With both Microsoft and Apple dragging their feet, Dell is champing at the bit to get out there with multitouch netbooks, tablets and mini-tablets. As revealed by early demos, however, Dell doesn’t have a clue, and current offerings don’t have a prayer.

Guess who does know multitouch? The Pre launched Palm into the same class as Apple in terms of gesture, physics and multitouch user interface design and execution. Imagine the Palm Pre’s user interface on a tablet!

Launching a WebOS-based convertible tablet application before Apple gets out its inevitable multi-touch tablet would put Dell in the leadership position for the future of PCs.

This is precisely the kind of shock-and-awe move that Dell needs to climb its way back into contention with HP for the number-one spot in the industry, de-commoditize its PC business and fight off the loss of customers to Apple.

Dell: Who you gonna buy?

The Wall Street Journal reported Friday that Dell CEO Michael Dell told a source that he expects to acquire a “significant-sized company” soon. Other evidence indicates that Dell is lining up its financial ducks for such an acquisition. The company is sitting on about $10 billion in cash, and Dell recently sold $1 billion in bonds.

Businessweeksuggests that Dell’s acquisition targets could include BMC Inc., EMC Corp., Affiliated Computer Services Inc. (ACS), Symantec Corp., Motorola Inc. and — you guessed, it — Palm. Of all these companies, Palm is the cheapest to buy, with a market value of just $1.7 billion (the actual price would be higher).

Meanwhile, Palm is never going to get a better price than right now, while the company is enjoying warm-and-fuzzy press and good vibes on Wall Street in the wake of its Pre launch.

Either the merger won’t happen, in which case both companies will continue slouching toward has-been status, or Dell buys Palm. In that case, the newly reconstituted company can rise to a position of dominance and leadership and bring sorely needed competition and innovation to the mobile space once again.

This marriage benefits everybody. I hope they do it.

Mike Elgan writes about technology and global tech culture. He blogs about the technology needs, desires and successes of mobile warriors in his Computerworld blog, The World Is My Office. Contact Mike at mike.elgan@elgan.com, follow him on Twitter or his blog, The Raw Feed.

China will require that Web filtering software be included with all computers sold in the country, another step up in its efforts to control pornography and other content on the Internet.

The move follows a government crackdown on online smut that has led to the closure of thousands of Web sites this year, and concern that such campaigns could expand to target content that is political rather than pornographic.

PC makers will be required to pre-install the Web site-blocking program or offer it on a CD-ROM included with all PCs sold in China after July 1, according to a translation of a Ministry of Industry and Information Technology notification seen by IDG News Service.

The move is meant to protect youth from “unhealthy” information online, according to the statement.

The program, called Green Dam Youth Escort in Chinese, blocks only sites with pornographic content, and parents can turn it off, said Bryan Zhang, general manager of Jinhui Computer System Engineering, which designed the software.

But the measure triggered concern about wider censorship.

China blocked access to Web sites including Microsoft’s Bing search engine last week, adding to a list of previously banned sites including YouTube and some blog services. Twitter and Hotmail were also blocked ahead of the 20th anniversary last week of Beijing’s bloody crackdown on democracy protests, though those Web sites could load again on Monday.

Dell will consider including the software with new PCs only if its purpose is to block pornographic content from children, and only if it can be disabled, said Amit Midha, Dell’s president for Greater China.

It will not install software that helps censor other Internet sites, Midha said. Midha also said Dell had not heard of any Chinese government notification ordering the program’s use.

Dell is the third-biggest PC vendor in China, according to research company IDC.

Lenovo and Hewlett-Packard, China’s number one and two PC vendors, declined to comment.

Image recognition technology lets Jinhui’s program block individual images in addition to Web sites when they resemble sample pornographic images in a database, said Zhang, the company’s manager. Users are notified when updates are available for download, he said.

Jinhui’s Web sites says its program also prevents the use of proxy servers or circumvention software to visit banned sites, measures often used by savvy Internet users in China.

China’s government will pay for the first year of the program’s use for all PC buyers, after which they can buy the program from Jinhui, Zhang said.

Jinhui has previously worked with a research institute under China’s public security ministry on a blocking system for “harmful” online video clips, and has “long-term technical cooperation” with the army’s Information Engineering University, according to its Web site.

Jinhui won a government tender to distribute its software with PCs about a year ago, and has since worked with PC vendors to ensure compatibility and proficiency with the software, said Zhang.

The company has also worked with the government to put its software on PCs in schools, and hopes to market the product abroad, he said.