Recently there’s been a lot of talk about who Apple, Inc. is planning to acquire since they’ve been sitting on a $50 Billion + pile of cash over the last couple years and based on market cap are now the second largest company in the world. The debate has recently heated up due to Steve Jobs comments during it’s Q4’10 earnings call. Steve said…
“We would like to continue to keep our powder dry, because we do feel that there are one or more strategic opportunities in the future.”
Some believe those comments just mean they’re looking into buying a startup or cloud media management company, but other rumors are more fixed on Apple making 1 or 2 large acquisitions in the very near future. Let’s take a look at some of the rumors and why they would or wouldn’t make sense. Mind you I’m not coming from a hard numbers or valuation angle… merely from a culture/product one. I’m sure some commenters will have some insight into the possibilities numbers wise.
This rumor has been floating around for the last couple months and honestly doesn’t make any sense to me. Apple and CEO Steve Jobs have made it clear they’re not interested in adopting Adobe Flash anymore in their products. This was apparent even way back to 2007 when Apple left Flash off the 1st gen iPhone and of course even more apparent when they left it off the iPad in 2009. Now Apple has started shipping new MacBook Air’s and other Macs without Flash preinstalled.
Outside of Adobe’s creative suite software which I don’t think is valuable enough for Apple to actually want an acuisition I don’t see any reason why Apple would have any interest in Adobe.
This rumor has also been floating around for quite some time and ramped up recently when Apple CEO Steve Jobs was seen taking a stroll with Facebook CEO Mark Zuckerberg around Palo Alto who he had invited over for dinner.
Apple and Facebook have had an up and down relationship over the last few years. It first started out on good terms with it’s Apple Student Groups, but has recently been on rocky terms as Apple apparently pulled Facebook Connect from it’s integration with Ping, Apple new social networking venture based around the music aspect of iTunes.
As we all know Facebook has turned down quite a few acquisition offers over the years so there’s no reason to believe this one would finally be the one they accept, but on the surface this one actually makes the most sense to me. It gives Apple instant access to over 500 million users along with loads of personal information about their habits, interests, likes etc… It also gives them the world’s largest social networking site and the ability to integrate sharing on iTunes, iOS devices and Macs.
Even more important to me it gives them two things that are about to change the way many of us search and pay for things. The first one being a fast track into what some are calling the paradigm shift in search… Social Searching. Gary Vaynerchuk has talked about this many times and I fully believe that’s where Facebook is going. The ability to search on Google gives you results based on numerous factors including popularity of a site based on incoming links, authority of those incoming links to that site and SEO. As Gary has said… wouldn’t you rather get results based on friends recommendations first rather than how well a site was SEO’d? I sure would. If I’m looking for Chinese restaurants near me and I could get results from Facebook search based on Chinese restaurants in that specific area that my friends or friends of friends have liked… that would be extremely powerful.
The second one being Facebook credits or currency. Facebook recently announced Walmart and Best Buy would join Target in selling the digital currency for purchases in games or virtual goods without the need for a credit card or Paypal account. Although it’s currently only available for game/app purchases and virtual goods… it won’t be long until you can purchase goods online or at retail stores with Facebook credits. This also would be a huge pump in revenue for Apple with it’s online App Store, iTunes Store and retail stores. They could get a deal done for currency without an acquisition, but the benefits of all the personal data still make Facebook one of the most desired companies in the world to buy.
This acquisition is a long shot based on Facebook and Zuckerberg’s history, but also makes the most sense for Apple imho.
While Twitter has also long been rumored to be courted for an acquisition by many of the worlds top tech giants I’m not sure they have enough personal info stored away on it’s users to be worth it as a major acquisition. I love Twitter and not only use it personally, but also as a business tool. I actually think the best part of Twitter is it’s ability to receive customer service quickly. This is because it’s open and public and demands a response from a company unless they want quickly spreading bad press. On the other hand I don’t see Apple finding much value in the company outside of it’s social networking which could be integrated natively into iOS devices, Macs and iTunes without the need for a costly acquisition.
This one is interesting for a few reasons. Yahoo has been struggling for a while now and seem to have no real road map. They’d be a semi cheap acquisition and could leap frog Apple into the search business which would allow them to possibly rebrand Yahoo and further move Google out of their iOS devices which they currently use as the default for search and maps.
Yahoo has been a mess for years so maybe it would take a company like Apple to come in and overhaul the company first by narrowing down it’s focus on a handful of areas and redesigning it’s site and search. Currently they’re all over the place and getting the crap kicked out of them by Google and now even Bing. This would also allow Apple to expand it’s iAd services to not only mobile, but to desktops/laptops as well.
This also would would an interesting one, but not sure how much sense it would make either. Netflix has well over 10 million monthly subscribers which can order new movie titles delivered via mail or stream over Netflix capable devices including Apple iOS devices like the iPhone, iPad, Apple TV and of course the Mac as well.
Apple clearly is already making a push into more cloud based computing and content streaming with the upcoming opening of a huge server farm in North Carolina and their recently released new Apple TV which only streams photos, music and movies. I’m not sure how much benefit scooping up Netflix would be considering Apple already has a huge userbase tied into iTunes. Plus the acquisition would have to be retroactive as lots of companies have contracts with movie and music studios stating that if they are acquired by another company all contracts would have to be renegotiated with the new owner and as we know Apple has already struggled on negotiations with studios with iTunes. Not sure this one is plausible, but I would love to see Apple finally get into an iTunes subscription based model for music, TV and movies.
This rumor is also one that’s very plausible as Apple CEO Steve Jobs is Disney’s largest shareholder and sits on the board of directors. You’ll remember Steve was given stock and a board position at Disney when Disney bought Pixar Animations. Apple and Disney also have a long relationship of working together and typically is usually one of the few companies that jump on board as a partner whenever Apple introduces new features that require partnerships with movie and TV studios. Disney also owns ABC and ESPN which would be a huge gain for Apple as they could immediately integrate content from these companies into their services.
Spotify is a music streaming service that allows you to pay a membership fee to stream any track you want at anytime. It’s not available in the US yet as they are yet to agree on a deal with US record lables, but rumors have been everywhere the last few days about negotiations going on daily between Apple and Spotify.
Apparently Google was in talks last year with Spotify about an acquisition, but fell through because the deals it has with record labels in Europe wouldn’t be grandfathered in. Apple may run into the same problem and with their recent acquisition of streaming service Lala, I’m not sure how much sense this would make. One thing is for sure… people in Europe love the service so either way let’s hope it comes to the US soon.
Update: Spotify denies talks with Apple. I still don’t necessarily believe them when they say they’re not in talks. I understand why they would say that as there’s no deal in place and the public rumors are that Apple basically shut down Lala after acquiring them so it would make sense to make sure the public doesn’t think that’ll happen to them. That kind of news is just bad for business especially if there’s no deal in place.
Now up until this point these are all just weekly rumors we hear on tech blogs backed up by a few anonymous sources and market analysts, but I’d love to hear some opinions on which ones you think might actually happen and why.