Witness Google’s recent acquisition of Nest Labs, makers of the so-called popular Learning Thermostat for the home or office. What’s the price tag for a company that everyone says Apple was not interested in? $3.2-Billion. Yes, that’s B as in billion dollars.
Burning A Hole In The Pocket
The way I see it, Microsoft and Google have a lot more in common with each other than they have in common with Apple, despite copying Apple at every turn.
All three companies have plenty of money in the bank. All three companies spend money to buy other companies.
The difference seems to be that Apple acquires technology which can quickly be integrated into the company’s product line.
Google and Microsoft seem to acquire technology more because they cannot really invent their own diversified product future from within.
That may seem like a subtle difference, but is it really? In their attempts to compete with Apple’s growing and highly successful diversification, both Google and Microsoft have spent tens of billions of dollars and have exactly zero to show for it.
I Wonder Where The Money Went
As an example, Microsoft bought Skype then bought Nokia. How’s that working out so far? Anything going to the bottom line there? Nope. How about the company’s recent attempt to copy Apple’s success with branded smartphones and tablets? Microsoft’s revenue and profits still come from Windows and Office.
As another example, Google bought Android, then bought Motorola, then bought patents, Waze, Nest, and who knows what else, all in a vain attempt to be like Apple– diversified and loved. How are all those purchases working out so far? Google’s revenue and profits are still mostly from search engine advertising and the company is increasingly hated for privacy issues.
Meanwhile, Apple chugs along, growing enormous profits from a wide variety of fully diverse yet interconnected premium product lines much beloved by hundreds of millions of customers. Mac, iPod, iPhone, iPad, iTunes, App Stores, Apple Stores.
So, why didn’t Apple buy Nest? It’s a premium product for the home, designed by former Apple executives and engineers (Apple supposedly fired Nest co-founder and iPod father Tony Fadell), right? Does anyone think that Apple doesn’t have the chops to create a better product for less than $3.2-billion? Obviously, Google doesn’t.