Intriguing Tech Acquisition Scenarios
With acquisitions in the tech community happening at an unprecedented pace, I’ve been thinking a lot about acquisition scenarios that might be interesting to consider, though they may realistically be far-fetched.
Here are 6 I came up with:
1. Microsoft acquires T-Mobile
Microsoft is clearly buying in to the philosophy of owning the “end to end experience” with its purchase of Nokia. It’s worked remarkably well for Apple all these years. Google thought it was the right idea too with Motorola (until it didn’t). Now, it’s Microsoft’s turn.
Why not take the “end to end experience” a step further?
By acquiring T-Mobile, Microsoft can eliminate the need for customers to deal with a carrier entirely.
Give Windows Phone customers a fixed amount of data + unlimited calling/text for free, with option to add more via the Windows Store. Add LTE capability to the Surface, and offer the same deal with cellular data.
Right now, buying a smartphone is just half (the less expensive/frustrating half) of mobile phone ownership.
If Microsoft can package the process into one pleasant experience, I think their mobile device market share goes up in a hurry, and along with it, probability that consumers once again buy into Microsoft’s ecosystem of products.
2. Google acquires Zynga
iOS is still the overwhelming first platform of choice for mobile developers. Additionally, games represent a large portion of both downloads and revenue (either up front or through in-app purchases).
By acquiring Zynga, Google rids of iOS of one of its largest viral game developers. This deal allows Zynga to avoid the constant pressure from Wall Street to produce revenue, and can allow them to focus on creating quality games exclusively for the Android platform.
Google can help groom Zynga into a successful business and company asset, similar to the way it did for YouTube.
Gaming has always been a profitable business if done the right way. Google ownership will give Zynga the runway it needs to be able to transform into the gaming company it wants to be, and in the long run will be a great asset to the Android (maybe even Chrome OS?) ecosystem. It could very well be the first domino to toppling Apple’s dominance in app revenue market share, which helps enforce the “iOS first” developer mentality.
3. Twitter acquires IntoNow from Yahoo
IntoNow was an app acquired by Yahoo a few years back that functioned as a “Shazam for TV”. It could automatically detect what you were watching and allowed you to check into and discuss shows. Yahoo recently shut it down.
Though it may not have had much success at Yahoo, I think this technology would be incredibly valuable in the hands of Twitter. Already, Twitter has managed to position itself as the top platform for discussing live television, but I believe it could leverage the IntoNow technology in a more powerful way.
For me personally, I often scan through Twitter as I’m watching TV (usually live sporting events), to see what people I follow are saying. In particular, a lot of sports commentators I follow live-tweet games, and seeing their real-time commentary really augments the experience of watching the game. After watching the Super Bowl (and simultaneously scanning Twitter), it became abundantly clear to me I’m not the only one who considers Twitter as valuable second screen to TV.
With the IntoNow technology, Twitter could provide a curated, high-quality second screen experience by automatically detecting what you’re watching and subsequently filtering your tweet stream accordingly. This would enhance the relevancy of viewed tweets, increase likelihood of tweet interaction, and perhaps most importantly, have a dramatic positive impact on ad revenue.
Seems clear to me that this would be a huge step forward for both users and advertisers. Wall Street wouldn’t be able to contain its excitement.
4. Facebook acquires Venmo
With the exception of Instagram and Snapchat, I’ve never seen my network of Facebook/Twitter friends adopt an app or service as rapidly as they have adopted Venmo. This is particularly impressive given that Venmo requires you to either enter bank or credit card information to be useful.
Facebook’s mission is about connecting people and sharing, but right now, this mission is being fulfilled only online. Acquiring Venmo would have served two purposes for Facebook.
Acquiring Venmo extends it’s stronghold in sharing and connecting into the real world. When hanging out with friends offline is still facilitated by Facebook, you’ve reached the pinnacle of making the world more connected.
Additionally, Facebook as a payments company, with it’s 1+ billion user base, is sure to excite Wall Street investors. It’d undoubtedly bring in increased revenue, and they’d beat Apple to their long-rumored plans to enter the payments space. Google Wallet hasn’t really taken off yet either, so there’s a lot of uncharted possibility here.
Venmo was recently acquired by PayPal as part of the Braintree transaction, meaning this scenario will surely never happen. I think Facebook missed a gigantic opportunity here, which is why I included this acquisition on the list anyway.
5. Yahoo acquires AOL
Yahoo has been on a bit of an acquisition spree as of late. Marissa Mayer has certainly made moves to make Yahoo a more technology-based and innovative company, but at the end of the day, Yahoo is still primarily a media and content company.
By acquiring AOL, Yahoo gets a lot of online real-estate powered by some very influential brands and blogger network. To truly succeed as a media and content company, Yahoo has to build and maintain a reputation of serving up quality content via recognizable brands. They can then leverage their technological infrastructure to serve up this content in any and every way their users want.
It’s clear to me that this is what Yahoo’s strategy has been with their recent acquisitions, but there are still plenty who question what the company’s direction is. Acquiring AOL solidifies their mission, and makes a great statement while doing so.
Simultaneously, it will inspire confidence in Wall Street that they’ll be able to drive ad revenue up by owning valuable online real estate.
To me, this scenario doesn’t seem at all all that far-fetched, at least compared to the other scenarios described here.
6. Netflix acquires Spotify
Netflix has established itself as the clear leader in subscription streaming services. Though Amazon has a quality product with Instant Video, Netflix is the name and brand in subscription entertainment. They’ve also been successful thus far in producing their own content, which provides a compelling roadmap for the company over the next few years.
Netflix should go for a home run and acquire Spotify, arguably the best and most popular subscription available right now.
This would position Netflix in a space entirely on its own. No company offers both an unlimited video streaming service and an unlimited music streaming service.
It can charge customers a single (perhaps slightly discounted price) for a comprehensive video and music subscription service. Most people I know subscribe to one or the other (if not both) already; by offering both services in a combined, discount package, I envision a decent conversion rate from single-service subscribers to the full package.
Great for revenue, great for investors, great for consumers.
Additionally, now that Netflix possesses the music label deals Spotify worked out, along with an expected increase in subscribers, I would expect that its negotiating power with movie studios increases dramatically. This allows Netflix to license more blockbuster films, thus enhancing the value of a Netflix subscription.
There would surely be a lot of financial logistics to work out in terms of pricing the new combined offering, as well as an enormous amount of backlash from the entertainment industry. I consider this scenario highly unlikely to happen, but it’s still an intriguing one to consider.
To hear more of my thoughts or to continue the conversation, find me on Twitter.
*Disclosure: I currently work at Microsoft, but have no knowledge of acquisition plans of any company. The T-Mobile scenario described above is purely a personal opinion.