When Tech Giants Go Shopping
So far, 2014 has been a big year for the tech industry in regards to acquisitions. But if you think that Facebook’s $19 billion purchase of WhatsApp was the largest, you’d be mistaken.
Acquisitions are a huge part of driving the tech industry forward. They bring in new ideas, fresh talent, proprietary technologies, and much more. For investors, an acquisition can mean big money, on both ends of a buyout. Take for example Comcast’s bid for taking over Time Warner Cable earlier this year, investors in Time Warner enjoyed a 6.8% jump in their stock value. These types of deals aren’t rare; just last year, there were 2,710 mergers and acquisitions in the tech industry.
The Big 4 of the tech world (Apple, Facebook, Microsoft and Google) all have made very important acquisitions, and some may even change the world. Take for example Google’s buyout of YouTube back in 2006. The video streaming site was purchased for $1.6 billion in stock. YouTube has come a long way from being famous for its entertaining gag videos like “Charlie Bit My Finger.” The platform has become a worldwide visual communication tool. It even played a role in liberating parts of the Arab world in the Arab Spring. Today, YouTube is estimated to be valued at $15 billion.
Perhaps the next big game changing acquisition will be one that wasn’t mentioned in the infographic: Apple’s purchase of Beats Electronics. Apple acquired Beats for a reported $3 billion. Some speculate it wasn’t to offer superior headphones to Apple’s clientele; rather, it was for Beats’ streaming service. There may be a shift in how modern music listeners enjoys their music. Apple’s iTunes’ sales have been slowly dwindling as of late, album sales are down 15% this year. The future may lie in subscription based streaming services, something Beats has a head start in.
We’re only half way through 2014 and we have already seen major players shake up the tech industry through mergers and acquisitions. I am sure that I’m not alone when I say I’m excited to see what’s in store for the remainder of the year.