Back in July, when we interviewed Stephen DeWitt and Jon Rubinstein, our own Joshua Topolsky asked about the possibility of a partnership between Amazon and webOS. Jon Rubinstein, who is on the board of Amazon, said that Amazon could "make a great partner" but unsurprisingly wouldn't comment on whether or not discussions had taken place. In August, Josh floated the idea again in a Washington Post column, but not until last night did it seem like such an idea was really more than a fantasy in our leader's beautiful mind.
Venture Beat is now reporting based on an unnamed but "well-placed" source that Amazon is one of several companies bidding on Palm, and that Amazon is the closest to closing the deal. HP would likely sell Palm for significantly less than the $1.2 billion it paid for the company in 2010.
It would certainly be an interesting move at this point, for Amazon, which has just unveiled it tablet, the Fire, which runs a top a heavily customized Android UI. The New York Times speculates that Palm's patent portfolio could help Amazon to stave off future litigation over the just released Fire, which would make the purchase a defensive move more than an investment in Palm for future webOS devices.