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Apple's secretive acquisition past

Joel Mathis | May 14, 2014
Last week's unoffical report that Apple is looking to buy Beats Music for US$3.2 billion was significant far beyond its industry-shaking business ramifications--it also offered a rare peek into Cupertino's usually secretive acquisitions process.

Innovation. "I do believe [Apple has] picked up the pace (of acquisitions) but that is due to the nature of how fast innovation is happening around the industry," Bajarin said. "Many companies are getting funded, creating unique innovations, and more, so Apple is looking stay ahead of the market and competition."

Bajarin offered several examples: The 2008 purchase of P.A. Semi, a semiconductor design group, lead to the creation of Apple's A5 processor, which Bajarin described as "one of the most innovative SoC designs in the market today." Similarly, the 2012 purchase of AuthenTec led to the iPhone 5s's Touch ID. "Both those underlying companies are critical to the company's long term strategy," Bajarin said.

Shore up weaknesses. A number of Apple's 2013 purchases were of digital mapping companies—an attempt to shore up a clear weakness after the company ditched Google in favor of its own, much-unloved maps app for iOS. 

Similarly, the acquisition of Beats is seen as a way to make progress in the streaming music area: The relatively young and comparatively underdeveloped iTunes Radio isn't seen as having made enough headway against services like Pandora and Spotify; Beats Music offers both ready-made technology, an enthusiastic audience, credibility to Apple in an area where it's still seeking a foothold.

"You don't know anybody who actually uses it," Pachter said of iTunes Radio. "You don't know anybody who says it's great."

One final element enabling the speeded-up pace/size of acquisitions: A gigantic hoard of cash—around $150 billion as of the most recent quarter—that Apple's investors expect to be put to good use.

"I think one contributor is their gigantic cash hoard and the judgement by the financial community that it ought to do something more productive than sit in an offshore account," Purdy said. "I think they've got an attitude under Tim Cook that they're going to be more productive with it, instead of saving it for a rainy day."

 

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