Tech giants have been spending big bucks over acquisitions. Facebook, for instance hasn’t been shy of the more than $20 billion (amount of the 23 undisclosed deals not included) spent for big time acquisitions. Given the revenue that they’ll be getting back, these tech giants always knew that it will be worth it.
Acquisitions in terms of business may not spell profit for some tech shoppers; it can be to acquire talent of the acquired company, to shut down a rising competitor, gain ownership of notable patents, get access to coveted equipments and technology or simply show they can afford it.
It has always been an issue how some tech companies and apps have held out from a buyout, then lose a fraction of the original offer after. While some of these acquisitions are also deemed too overpriced, like the question thrown at Facebook after WhatsApp acquisition, “What’s gotten into Facebook’s mind to have bought WhatsApp for the price that could have built two world trade centres (with 2 billion change)?” Answer? WhatsApp has 450 million users. Nuf said.
TechCrunch has featured an interactive infographics from Simply Business of the acquisitions by the major tech companies on the web – Apple, Google, Amazon, Yahoo and Facebook (although it’s a shame that Microsoft isn’t included in the infographics). You can see the compared acquisitions over the last 15 years in this post Visualizing 15 Years of Acquisitions by Apple, Google, Yahoo, Amazon, And Facebook.
Now when we stop critiquing and turning bitter on these extravagant money exchanges, we might see deeper reasons why these acquisitions happen. Let’s go over some and answer a few questions too.
Facebook acquires WhatsApp
Price: $19 Billion
via Álvaro Ibáñez
Chris O’Brien of LA times described the shock of the tech world after this acquisition, “Silicon Valley is still trying to pick its collective jaw off the floor following the news”. This hilarious line has summed up the Facebook-WhatsApp deal.
Facebook though is trying to get access to WhatsApp’s 450 million users. Now was it worth it? CNN’s Michael Wolf said yes, Forbes’ Godon Kelly, by financial metrics, and Robert Hof said no, Zuckerberg said yes and it could be worth more. But Google doesn’t think so (a techie rumour published in Fortune said that Google offered $10 billion for it, no more, nor any board of director seat which Facebook gave).
Google acquires Motorola Mobility
Price: $12.5 billion
Well, what’s 12.5 billion with the 17, 000 patents they’ll be gaining from the buy? Finalised in 2012, the move was done to gain control on the hardware and software since Google is planning to play in the smartphone and device market. These patents were also said to be used to ward off lawsuits from Apple and Microsoft.
This January 2014 though, Google announced Lenovo’s acquisition of the Motorola Mobility for $2.91 billion. Bought for 12.5b and sold for 2.91b? You can do the math.
HP acquires Autonomy
Price: $10.3 billion
The $10.3 billion acquisition cost was announced in 2011 for the enterprise software company from HP. This price however has been admitted by HP to be overboard after accounting discrepancies has been noted. This later ensured to get Leo Apotheker and Mike Lynch being sacked from the seat after Autonomy failed to reach revenues and infighting ensued.
Microsoft acquires Skype
Price: $8 billion
Microsoft swooped on Skype just before Google and Facebook made the deal. The platform may only have a small user base, but the swoop has been made due to its 8 million paying customers. Skype now has a pre installed in windows device. Skype has brought in 200 million in 2012, barely contributing to Microsoft’s overall earnings, but they don’t mind. After all, they got 1/3 of the world’s video calls.
Oracle acquires Sun Microsystem
Price: $7.4 billion
We’re still in the millions and in no way going down for millions. With Oracle’s acquisition, they took ownership of the Solaris Operating system, Java and MySQL. These have given Oracle the leverage to sue Google over the use of Java in Android platform, but this fell through since the jury found that Google wasn’t guilty, albeit with a small breach on code copying. Zero damages were asked, but the company now is looking for an appeal.
Microsoft acquires Nokia
via the verge
Everybody is still pretty nostalgic when Nokia is mentioned (I grow up with it until all other players came in, Apple and Samsung). The once no. 1 mobile phone manufacturer is now owned by Microsoft for 7.2 billion. The buyout included all from patent, to mapping services to the employees.
Some theories though over this acquisition have emerged. Some say Microsoft bought the mobile phone company to put a stop to Nokia’s plan of dumping windows devices. This prompted Microsoft to shell out billions to hold their windows phone afloat. Read the analysis here.
Google acquires Nest Labs
Price: 3.2 billion
Well, Google wanted a control of all “Internet of things” through the Nest. The Nest has the aim to help people’s live comfortably by creating smart products that can make decisions. Just so you know, Nests co founder is Tony Fadell, the iPod creator.
Dell acquires Quest Software
Price: $2.4 billion
via Jerry Luo
In the decline of hardware and PC sales, the dell hopes to revive something through this buy out. Quest software is known for enterprise software solutions – database management, data protection and windows server management. The deal has Dell outbid rival by 2.4 billion.
Yahoo acquires Tumblr
Price: $1.1 billion
The tech world has labelled Marissa Mayer’s acquisitions “shopping sprees” after she joined Yahoo!. Tumblr seems to be one of her smartest moves with its 78 million posts and 173.4 million blogs. Yahoo! Aims to reevaluate Tumblr ads for monetization and make it available in 2014. As for now, Tumblr has become Yahoo!’s gateway to the young adults, which consist the majority of internet users.
Facebook acquires Occulus
Price: $2 billion
Well, the $2 billion this time seems like a spare change from Facebook after the WhatsApp deal. Occulus is a virtual reality focused company. It has been known to found the Rift, although the sale has upset many of its fans. The tech world is yet to see as to how Facebook is planning to use the company.
Facebook acquires Instagram
Price: $1 billion
Again, another fail for some, but Instagram, a photo sharing site, is worth the price. Since its acquisitions, Instagram grew by 23%. Facebook will also be introducing advertising platforms for the photo sharing site.
“Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests,” Zuckerberg said as seen in NY Times Evelyn Rusli article.
Other billion dollar acquisitions include Geocities (3.5b) and Broadcast.com(5.7b) by Yahoo, MapQuest (1.1b) by AOL, PayPal (1.3b) by eBay. YouTube (1.6b) by Google, CNET (1.8b) by CBS. Remember, there are other purchases we haven’t listed here, and undisclosed acquisitions aren’t even included.
Billion Dollar Acquisitions, Billion Dollar Start Ups
This billion dollar acquisitions are mostly done by billion dollar startups. These billion dollar startups has been aptly called by Aileen Lee and the team to be “Unicorn Club” where Facebook has been labelled as the “super-unicorn” of them all. Acquisitions in the process have led to the making of these unicorn club members.
The TechCrunch made a full length feature of this topic (read here). Up to this time, this unicorn club is a 39-member club, the top .07%.
In 3023, the world has been exposed to the world of mobile app. Due to mobilisation, many tech companies are doling out millions for these startup apps.
Here are some of the mobile acquisitions of 2013.
Based in Israel, Waze is a community based mapping, traffic and navigation app. Google bought it for $966 million.
Epocrates is a medical app provider. It was bought by athenahealth at $293 million.
MApMyFitness is a mobile fitness app with 20million registered users. Under Armour, an apparel company bought it for $150 million.
Onavo is another company based in Israel. Its series of apps has been valuable for Facebook, prompting the platform to buy it for $120million.
Cue is an app that acts as a personal assistant. Apple acquired the app to enhance iOS’s catalogue and social data capacity for $50 million.
Summly is the app that made headlines after its acquisition due to its 17 year old founder, Nick D’Alosio. Summly is an app that makes use of natural language process and algorithms to pick out parts and summarize long news articles. It was priced at $30 million by Yahoo!.
The tech market is maturing and constantly changing. And since business now can’t seem to function without the internet and the tech, the world will continue to see the merging of the two. In the next month, we will continue to see interesting things happen in the enterprise sector. Let’s just hope that it isn’t as jaw dropping as the WhatsApp-Facebook thing, you know, that surprise has taken several analysis and tech articles appeasement for it to finally make sense.
So who’s going to buy who in 2014? Any rumours?
featured image via Ahmad Nawawi