A Dozen Acquisition Targets for Big Tech Companies
A little over two years ago, I wrote a post suggesting several companies Apple, Google, and Microsoft might want to acquire. As I thought about that post this week, I planned to revisit it in a similar format but then decided to approach things from a different angle. So here is a list of businesses I think would make interesting acquisition targets for the major consumer tech companies, in several major categories.
The most interesting acquisition targets in the hardware space are those that seem to have cracked a niche but are struggling to grow beyond it and would benefit from being part of a larger ecosystem. The two that come readily to mind are Fitbit and GoPro, both of which I identified around a year ago as one-trick pony consumer technology companies who would likely struggle to find long-term success as standalone businesses. Either would now make an interesting acquisition target for the right consumer tech acquirer but, of course, the big question is who. I’ve often felt the most obvious acquirer is one of the two big camera companies, Canon or Nikon. But I think there’s also potential for Samsung to jump in. The fit (no pun intended) for Fitbit is less obvious but again, Samsung or one of the other big multi-category consumer electronics vendors seems the most likely bet. Both Fitbit and GoPro have done well, to a point, but now seem to be at something of a crossroads.
Conversely, there are those companies that seem to have peaked and are now more clearly on a downward slope. Jawbone was one of the companies I mentioned in that earlier piece and it has seemed to struggle recently. It would likely be a bargain for an acquirer interested in the audio or fitness space (or both). A slightly more long-shot bet is Nintendo, which has occasionally been suggested as a target for Apple, and which has also been struggling quite a bit, though the recent success of Pokemon Go has raised hopes of a comeback. Apple might still be an interesting prospect, but either Microsoft or Sony or a content conglomerate might be able to do something interesting with all the technology and IP Nintendo still owns. We might add HTC to this list of hardware companies past their prime too. The Vive VR business would be an interesting asset even as much of the rest becomes attractive.
Apps and content
This is probably the broadest category here and there’s no shortage of potential acquisitions. The companies in this sector run the gamut from subscription content providers to one-off app makers and across a number of different domains. Netflix is a perennial subject of acquisition rumors but is now getting to a size where the number of potential acquirers is rapidly dwindling – I’ve suggested Apple as a potential acquirer in the past, at least somewhat seriously, but that remains a true long shot. Also in the content space is Spotify, which I mentioned in my piece two years ago as a potential acquisition for Google. It’s heading towards an IPO but the other possibility is an exit by acquisition and I’d say Google has to be the most likely candidate, though Microsoft is another intriguing possibility. The latter hasn’t been afraid to make productivity-centric acquisitions in the consumer market and has largely failed to create content businesses beyond gaming. This would be a big leap forward in that domain.
In the one-off app space are such diverse options as Pinterest (which I suggested as an acquisition target for Google two years ago); Musical.ly, which remains one of the most under-appreciated apps outside of its target demographic; and the Kik messaging app. Pinterest would still be an interesting addition for either Google or Amazon, as either an advertising or e-commerce bolt-on to their existing businesses. Amazon in particular has been willing to buy smaller businesses in adjacent spaces and continue run them independently under their own brands – Audible, GoodReads, IMDB, and Zappos are all existing examples and Pinterest could follow that model while benefitting from some integration behind the scenes. Musical.ly seems almost certain to be snapped up eventually by one of the big social networking or online advertising companies. And Kik is the rare example of an independent messaging app with a big user base.
Samsung’s recent announcement of its intent to buy Harman International will likely create further interest among big technology companies in the automotive industry. Harman was a somewhat unique asset here, in that it combined significant market share with a relatively focused scope. It promises particularly good synergies with the rest of the Samsung business. BlackBerry, which acquired former Harman subsidiary QNX six years ago, makes for an intriguing prospect. The handset baggage is minimal at this point, now the company has finally made the hard decision to discontinue making its own devices, so it’s largely a software and services company. Microsoft would be an obvious buyer, though the QNX part would likely raise antitrust concerns given the two companies are the dominant players in car operating systems. An Apple-BlackBerry marriage has always seemed particularly unlikely but is perhaps less so now, while Google would make another interesting buyer. TomTom is another interesting car-related asset which remains independent even as much of its competition has become part of bigger businesses. Apple relies heavily on TomTom for mapping, though it’s building up its own assets in some markets. It would perhaps be the most likely buyer at this point, especially if it wants to get serious about self-driving cars.
There are, of course, plenty of others I could list here, including some from the earlier piece and relative newcomers like Magic Leap. It’s striking that only one of the companies on my list from two years ago has actually changed hands while several remain interesting prospects for acquisition. But I wouldn’t be surprised if a higher percentage of the companies I’ve listed here end up being bought over the next two years.