Skip to main content

The buyer nobody considered: How Apple can leverage Yahoo

The past few weeks have brought the latest in several rounds of speculation regarding Yahoo! being acquired. Microsoft has been grabbing the biggest headlines, but speculation has discussed Verizon, Facebook and others.

I find it surprising that one of the most logical acquirers has not been mentioned. Namely Apple. Yahoo will compliment Apple's strengths, fill their gaps, and most importantly give them leverage for iDevice sales.

Apple, for all of their success in devices and media sales, does not have any strong position in mass market web services such as e-mail and search. Microsoft has Outlook (formerly Hotmail) and MSN.com. Facebook has mobile messaging (even for non Facebook users) and a controlling position in content consumption and advertising. Google has GMAIL and dominance in advertising. Apple, however, dominates media sales on iDevices through iTunes, but has very little for non-iDevice users. Are there any Apple services that are used by non-iDevice users?

Acquiring Yahoo would catapult Apple to a strong position in e-mail, search, news and other web services. While it will take work to turn around Yahoo's downward momentum, Apple has the cash to invest in it.

The critical factor, however, is that Apple can benefit from Yahoo's web services in ways that nobody else can. While others will look to Yahoo for direct profits, Apple can leverage Yahoo for device sales.

Unlike Google and Microsoft, Apple's primary profits come from device sales. Sales of music and movies are profitable, but their primary value is in creating the unique value proposition of iPhones, iPads and iPods for media consumption. This is in stark contrast to Amazon, who profits primarily from sales and not from devices, and Google, who profits primarily from advertising and not directly from Android.

What this means is that even if Yahoo's services are not profitable enough to support a company, Apple will benefit heavily if they leverage Yahoo services to motivate iDevice sales.

GMAIL users looking to buy a smartphone know that they can get better Google integration on Android phones. Google contacts and calendar are strongly integrated with Android, and Google apps such as Maps are often more advanced on Android than iOS. This Android support for GMAIL and Google services has paid off for Google: GMAIL user numbers have risen from 96M to 135M in the past 2 years, largely attributed to GMAIL being integrated with Android.

Suppose Yahoo mail users knew that iDevices would offer stronger support for Yahoo mail than Android? Suppose Yahoo contacts and calendar were integrated directly with iDevices? If Apple would gain even a small percentage of additional iDevice users, it would gain much more from Yahoo ownership than direct profit.

What other company can benefit so much from Yahoo services even if the profit from Yahoo services is lower than desired?

To date the idea of Apple acquiring Yahoo is pure speculation. It is true that most Apple acquisitions have been fairly small technologies that fill gaps in Apple's technology roadmap. They have had numerous acquisitions in the hundreds of millions of dollars range, but few in the Billions, and none the size of Yahoo.

But Apple's war with Google and Microsoft is heating up. Apple is losing device market share to Android devices, and when Apple's business model is built around device sales, this market share is central. As increasing numbers of smartphone buyers base their buying on e-mail and software integration, a Yahoo acquisition might be just the trick for Apple to counter Google.

Popular posts from this blog

33 Indoor Location Related Start-up Acquisitions

  Acquisitions Continue in the Indoor Location Industry; Grizzly Analytics Shows Price Growth at the High End and Continuity at the Low End New York, NY, February 22, 2021 - Despite the recent pandemic, M&A deals in the indoor location area have maintained a steady pace of 4-5 deals a year. At the high end of the spectrum, prices have increased to up to $400 Million for the highest priced recent deal and $165 Million for the second highest. At the lower end, many earlier stage companies have been acquired in the $2-3 Million range. A newly updated report from Grizzly Analytics gives prices and strategic details for 33 acquisitions in the indoor location area.  While the highest priced indoor location acquisitions have historically involved chip-based technologies, recent acquisitions have been more varied. “A few years ago the focus of indoor location M&A was all around pure localization technologies. The biggest deal to date is in fact for a chip-based localization ...

Adding real value to smartphone camera pictures

Most technology features follow a similar path, from imitation to improvement to transformation.  First they imitate something that came before, like telephones imitating the telegraphs of yesteryear.  Then they improve on them, like phones entering individual homes. Then they transform the entire endeavor, completely surpassing the previous technology, like phones automatically connecting people without operator involvement, which enabled society to communicate in ways that telegraph users never contemplated. Cellphone cameras are following a similar path.  At the beginning cellphone cameras were imitating digital cameras, adding the convenience of carrying only one device but basically doing the same as digital cameras did.  Then they improved on them, both with quality improvements and with the ability to share pictures wirelessly without wiring the phone to a computer.  The ability to instantly share and synchronize pictures from a phone is somewhat transf...

See great indoor location tech from the 2017 testbed

The videos from the Indoor Location Testbed at GeoIoT World 2017 are now released! Here is your chance to see how these solutions performed in our real-world evaluation, in the videos below. The testbed evaluated each solution by walking around a real-world venue, the GeoIoT World 2017 conference, measuring performance at 10 pre-selected points. Click here for the testbed report, which analyzes each solution's performance in a wide variety of metrics, including real-time accuracy, accuracy stabilization, consistency, latency, floor change, first fix, setup time & more. Let's start with BlooLoc's tag-based solution, which achieved accuracy under 2m in real-time and under 1.5m after stabilization: Then let's look at the infrastructure-free solution from GipsTech , which achieved accuracy under 2m without using any beacons or radio signals: Next is GipsTech's solution with BLE added: Next is BlooLoc's phone-based solution: Fin...