Apple doesn’t make big acquisitions, but they do make small, important purchases

Every time you hear that Apple is rumored to make a big acquisition of a company like Barnes & Noble or AMD or Sony or Adobe or whatever other huge company, just read this story about all the companies that Apple was rumored to purchase but never did:

For years, Apple has confounded the rest of us by not buying things that it should clearly be buying. Not purchasing other well-known companies is so core to Apple’s strategy that it must have a whole department devoted to non-mergers and un-acquisitions.

Apple does purchases companies and many of them have been key acquisitions for Apple. These acquisitions, however, are rarely big name, and they aren’t the kinds of acquisitions that Wall Street analysts or glib tech columnists predict. These are purchases or smaller companies that have specific skills and talents that can help Apple improve products or create new ones.

But let’s get back to the ridiculousness of many of these takeover rumors: Why would Apple want to buy Sony, a company that wants to be like Apple, but consistently can’t execute or get any of the details right? Sony has become a third-rate Apple wannabee with no direction. Apple buying Sony would be like one of those movies where the attractive, popular jock goes out with an artsy, homely girl as some sort of penance or charity thing or something (not one of those hot artsy, geek ladies).

Apple was once rumored to buy Adobe, markers of Steve Jobs’s most hated product, Flash. That tells you how silly these rumors are. I can only assume that these rumors have two origins:

  • Uninformed tech columnists trolling for pageviews and discussion. These people care more about stirring up trouble than sound analysis, and they seem to have very little understanding of Apple’s historical purchases.
  • Trouble makers on Wall Street looking to drum up the value of the company that Apple is rumored to be purchasing, so that a few wealthy clients can make a bunch of money off of false rumors and hope.

Apple makes small, targeted purchases that help them bring new products on line or bolster existing products. Take a look at a few key acquisitions by Apple:

  • Apple purchased NeXT in 1996. NeXT was Steve Jobs’s old company, and while the software and hardware of NeXT was advanced beyond Mac OS or Windows, NeXT was not a successful company. NeXT’s OS became the foundation of OS X. It took five years for OS X to hit the market, and it wasn’t until late 2001 that OS X was ready for primetime (and this version was still very early and not near the caliber of OS X today).
  • In early 2008 Apple acquired fabless chipmaker PA Semi, which had been working on creating powerful, low power computer chips. PA Semi helped give Apple engineering talent that would help Apple create its own line of powerful and low power chips.
  • Apple purchased streaming music service Lala in late 2009. At the time this purchase was largely assumed to be for engineering talent to help Apple setup its own streaming music service. That may or may not still be in the works, but it seems safe to say that Lala’s engineering expertise and cloud experience will be a big help for Apple with its upcoming iCloud efforts. I believe what we are seeing with iCloud this Fall is just the beginning of what will become of iCloud.
  • Apple purchased fabless chip maker Intrinsit early in 2010, a company that developed technology to accelerate ARM chips. Apple has used ARM chips in the iPhone since the beginning, but Intrinsity’s engineering helped them create the A4 and A5, which have helped Apple distinguish their products from other ARM licensees (ARM chips power all smartphones and modern tablets, but there are different variants of these chips based on ARM’s reference designs). PA Semi and Intrinsity were both smaller fabless firms that have helped give Apple the ability to create ARM-based chips that are unique from what other phone and tablet makers use. Almost all other phone and tablet makers use Nvidia’s Tegra lines, Samsungs Snapdragon lines or Texas Instrument’s OMAP lines of ARM-based processors. Apple’s chips have stripped out everything that Apple has deemed not necessary (and helped save power and space) and have also focused heavily on 3D performance for video games and other applications. While Nvidia is a 3D graphics manufcatuer by trade, Apple’s A5 is about twice as powerful as the Tegra 2 when it comes it 3D performance.
  • Apple purchased personal assistant app Siri in early 2010. Siri is a voice-controlled app that finds stuff on the Internet for users. Users can use natural commands such as, “send a taxi to my house” and Siri will help complete that task. It’s really cool technology that could help take iOS, particularly on the iPhone, to the next level. Siri’s technology is most likely being rolled into iOS and will help Apple create better voice command features (perhaps the biggest weakness of iOS) and help Apple compete better with some of the strengths of Android.

The biggest purchase Apple ever made was NeXT for under $500 million. I severely doubt Apple will be looking to make a huge blockbuster purchase of a strong established brand anytime soon. How do I know? Apple has never done it before, and they have been wildly successful by making small, targeted acquisitions.

Look for Apple to make more purchases of companies like Intrinsity and PA Semi. As Apple goes deeper into producing its own unique processors that fit Apple’s specific needs, they’ll need more engineering talent and R&D. Apple has gained a clear advantage in the mobile processor space by creating chips that do exactly what Apple wants it products to do, rather than building products around what other company’s processors can or cannot do.

Also look for Apple to make more targeted acquisitions of companies and products that will help them build out iCloud and iOS features. These small acquisitions add up and helped Apple deliver better products.

The next company Apple purchases most people will probably never have heard of.


Colleges no longer offering landline phones in residence halls

Rotary Phone in Ti Couz

Landline phones in college dorm rooms are quickly becoming one of those moments in time that will be featured in period films decades from now.

Being a freshmen in 2011 is a much different experience than 1952. Back then writing letters and the occasional phone call (most likely on a shared phone within your dorm) were your main forms of contact with the outside world. Now almost all college freshmen have cell phones, Skype and other phone services that allow them to call anyone at anytime.

There was a time when students had to line up to make calls via landline phones if they wanted to talk to family or significant others back home. In later years, freshmen were greeted with a landline phone and a phone call calling card when they came to campus. Just 10 years ago that was the primary way many students contacted their families back home.

But today landlines don’t make sense for most people, especially wired college freshmen. A landline phone is significantly worse from a usability experience, and that’s the primary reason that people are getting rid of them (and who needs two numbers and two bills anyway?). Try to imagine a time when your phone wasn’t something that was always on you, but rather someone that was tethered to a wall in your home.

Students can use cell phones, voip services such as Skype and other options. Better options. Cheaper, better, more usable. That’s the march of technology.

But that’s not the primary reason schools are getting rid of them. Why spends thousands or more on something that non one uses?

Landlines cost schools a lot of money, and hopefully this money can be put towards better uses. Case Western Reserve University, a small university of under 4,500 undergraduates, will be saving hundreds of thousands of dollars a year by getting rid of landlines in dorms. Bigger schools could be saving into the millions by cutting landlines. $18 dollars a line can add up quickly(and that doesn’t include setup costs and other IT costs):

It cost CWRU $18 per phone line per month, so discontinuing service saves roughly $280,000 a year, said Alma Sealine, director of housing.

I would question why a school hasn’t made this switch yet. Why would you keep offering a landline?

$280,000 a year is something that could be put towards improving other aspect of colleges IT. Most colleges still have email systems that are significantly worse than Gmail (how about Google Apps for all?). Maybe better online learning systems. Maybe just pocket the savings.

What do you think colleges and universities should do with these savings?

As China lies about news of train crash, Internet and blogs explode with torrents of truth

China’s versions of Twitter, called weibos, were able to get much of the truth about the train crash there that killed 36 people and injured many more out and past government censors.

Many people in China, despite censored and a state-controlled media, were not fooled by the Chinese governments official accounts that the weather and some other gobbledygook caused the two trains to collide. What makes services like Twitter so interesting for democracy and the freedom of information is that new messages come in so fast that they are really hard to censor:

“I call it the microblogging revolution,” Zhan Jiang, a professor of international journalism and communications at Beijing Foreign Studies University, said in an interview on Thursday. “In the last year, microbloggers, especially Sina and Tencent, have played more and more a major role in coverage, especially breaking news.”

Just look at these messages that got by government censors:

Then the reaction began to pour in. “Such a major accident, how could it be attributed to weather and technical reasons?” blogged Cai Qi, a senior Zhejiang Province official. “Who should take the responsibility? The railway department should think hard in this time of pain and learn a good lesson from this.”

From a Hubei Province blogger: “I just watched the news on the train crash in Wenzhou, but I feel like I still don’t even know what happened. Nothing is reliable anymore. I feel like I can’t even believe the weather forecast. Is there anything that we can still trust?”

Netflix uses its price increase to bring subscribers to the future (could news organizations do the same?)

Netflix’s price increase was largely created to encourage subscribers to adopt streaming only, because Netflix clearly sees that streaming is the future of video, not plastic disks shipped in the mail (and stored in big, expensive warehouses).

Netflix also wants to encourage content holders to release more content digitally. If the majority of Netflix’s customers are on streaming only plans (which is not the case today), that would push reluctant content holders to see that the days of the DVD are over.

A lot of people are upset with Netflix now, but in five years it will be clear that this was the prudent decision. They’ll end up convincing more subscribers to go streaming only and sell more new subscribers on the idea of streaming video, especially as their streaming library grows. Their streaming library will grow as content holders see more and more people signing up for Netflix streaming (and hopefully my streaming video dreams will come true).

The Nieman Lab tries to see if these lessons could be applied to the news industry:

Newspaper publishers started this process several years ago, saying, “Let’s have these print customers pay more of the freight of creating and delivering print.” Since then, community dailies that used to cost a quarter a day havetripled to 75 cents, and The New York Times goes for $6 on Sunday. They have priced in more of the cost of that expensive newsprint, ink, and delivery.

Now, this year, we’ve seen added in the charging for digital access. We’ve begun to see the answer to this question: How much will consumers pay for digital access? That’s still uncertain, though early evidence is coming in from The New York Times, Time Inc., and Journalism Online experiments, among others. In newspapers and in magazines, we see the interim play: the bundled, all-access subscription — pay us once and get both analog and digital, print and pixel. That’s a move for more consumer revenue in the short-term, but also a longer-term pricing play to get pure digital revenue as readers give up print.

What do you think? In my view, legacy news organizations, particularly newspapers, have been double- and triple- downing on print. Investment in digital has seen fits and starts, and there hasn’t been enough attention paid as to how to monetize the future, which is clearly digital distribution of news.

I have a dream for streaming movies, and it doesn’t involve mailing DVDs around the world.

“In the Google+ universe, created by nerds rather than jocks, being popular only gets you so far”

Mike Elgan explains how Google+’s extended circles disincentivizes people treating Google+ like Twitter and only following a few people:

Twitter is like high school. The equivalent of being the popular captain of the football team or head cheerleader is to have a massive number of followers, but to be following very few. Some of the mega-celebrities, for example, have more than a million followers, but themselves are following like 12 people.

Google+, however, which was built by math and computer nerds, turns that scenario upside down. If you think about it: Your potential reach on G+ is affected more by who you follow than by who’s following you. Let me explain.

I can theoretically reach 25 million people, even if nobody is following me <sniff!>. If nobody is following me on Twitter, my tweets will reach zero people.

This only applies to those who check their incoming stream, but it’s an interesting take nonetheless. Twitter has been overrun, in some ways, by celebrities who do little interacting and little following. Google+ is trying to get away from that broadcast model.

Come Google+ Hangout with us before we record our show each week

Every week before our show we host a Google+ Hangout preshow that anyone can join, give feedback and help shape our show.

We use this preshow to go over what we want to talk about, get some early thoughts out and get feedback from listeners. This is also a great time for listeners to suggest show topics and give feedback.

The whole preshow is very informal and people are welcome to come and go as they please. If there is enough demand we might host some smaller preshows at night on Google+ where people can suggest show topics and discuss issues that they care about.

Typically we have this preshow in the early afternoon on Wednesdays, but sometimes we have to change the schedule. We both tweet out and post on Google+ about the hangout before it happens. You can find us on these networks:

Episode 7: Why don’t you go ahead and just write me a letter

We kick off talking about the #fuckyouwashington hash tag that Jeff Jarvis started.

Does the profanity bother us? No. Does Twitter censoring the hashtag  bother us? Yes.

We also delve deeper into Lion after using it for a week. We discuss AirDrop, the feature seemingly few are talking about. We go deeper into Lion’s new security features.

We also discuss how Patrick may get a new computer setup, and we spend a long time debating Macbook Airs vs. Macbook Pros.

And we had several other topics that we wanted to touch one, but this podcast aims to dig deep into topics. So that’s all we got to.

We’d also like to thank Alan Smodic for joining us during our Google+ Hangout before the show. Each week before the show we have a public Google+ Hangout where we go over what we’ll talk about on the show and try to get some early thoughts out. We’ll tweet out the link and share it on our Google+ accounts.

Listen to this week’s podcast:


Show notes: