Apple (NASD: AAPL) has always had an appetite for acquisitions. The acquisitions made by the firm historically have been aimed and bringing in a specific group of people, or a specific technology that they could embed in their organization and achieve scale with. If the past is any indicator for the present and future, that means that Apple may be developing something big.
Acquisitions made by Apple over the last 12 months alone indicate that they will make the upcoming iPhone more feature-full, something critics have been calling for in light of an increasingly competitive market for mobile devices. With many competitor phones increasing in size, it appears that Apple plans to stick with the current aspect-ratio-to comfort phone handling. If this is, indeed, the case, then the only way to combat the competition is to aggressively add more features. Some recent acquisitions will help Apple reposition their brand to remain at the ‘premium’ level of products.
Take note of just a few recent acquisitions: Embark can help the firm integrate its mass transit navigation system into Apple Maps, a service that was disastrous at the start but is quickly improving. Matcha.tv is a video discovery service, while HopStop is transit navigation service valuable to their metro consumers. Passif Semiconductor is really a Bluetooth Low-Energy chip company, while Locationary is a local business search firm. Each of these acquisitions were small, but can make a meaningful impact on the user’s experience.
Recently, Apple announced its most recent acquisition, AlgoTrim – to be effective today. AlgoTrim is a Swedish startup with revenue earnings of $3 million USD for 2012, AlgoTrim builds codecs and designs solutions to maximize performance of data, mobile imaging, video, and computer graphics while minimizing memory requirements. The acquisition will help Apple in terms of allowing it to build more efficient media delivery for mobile devices by using less bandwidth, while still preserving quality.
Apple’s strategy of picking up smaller startups, with niche expertise in today’s market could provide important yields down the road. As we’ve seen, startup valuations can quickly skyrocket, and thus it seems to be a pragmatic solution to acquire intellectual capital at a reasonable price. Apple can envelope these firms into their already vast stable, and leverage them in a way that only they seem to be able to. The firm can in theory develop from within, relying on this growth through acquisition model for new ideas and talent on a regular basis.
