Apple Matchmakers May Finally Be in Business
(Bloomberg Opinion) -- Even in the ever-changing technology industry, there are some constants. One of those is matchmakers suggesting Apple Inc. buy Netflix Inc. or (insert hot internet/media company of the moment).
I have tended to dismiss these ideas, including the Netflix (and other) acquisition suggestions this week from a JPMorgan Chase & Co. stock analyst. Apple typically builds everything on its own, although it occasionally buys small companies to plug in technologies it thinks are important. Apple bought Siri, for example, and struck deals with several computer chip and component companies.
Apple’s largest purchase — Beats, for about $3 billion — was the exception that proved the rule. The 2014 deal was the foundation for what became Apple Music. Apple had resisted streaming music that people didn’t own, and it may have needed outside expertise and technology to nudge itself in a different direction.
Now, Apple is undergoing a drastic corporate remodeling, and its approach to build versus buy may need to change again.
Apple wants to rely less on selling devices and more on persuading its built-in audience to spend more on apps and subscriptions to digital music, online video and news. Future Apple digital offerings must work well on multiple computing devices, not just the ones that Apple makes. That is not a skill Apple has honed in-house.
The company has been hiring Hollywood experts for its expected Netflix-like web video service, but some observers think they could use more help. Dan Ives of Wedbush Securities suggested recently that Apple buy Sony Corp.’s U.S. television-and-film production division or another entertainment machine to push along its efforts.
Netflix itself may be out of reach, even for Apple. But Netflix has shown that a savvy company doesn’t need to buy an entertainment company to become an entertainment empire. Again, though, different times for Apple may call for different and unusual measures.
I should say that it’s fun but also foolish to predict the next big acquisition by Apple or any other company. Dealmaking is unpredictable. And dear reader, I’ve fallen victim to this problem. I wrote a piece two years ago saying big tech companies weren’t going to ride in and buy companies in stagnant industries. Within months, Amazon agreed to buy a supermarket chain for $14 billion. I’m now out of the tech M&A prediction game.
And while we’re talking about rethinking Apple’s approach to mergers and acquisitions, there’s also an opportunity for Apple to think different with its retail stores. Apple started to open its own shops in 2001, just before the debut of the iPod that became Apple’s first truly large-volume product.
It was helpful for people to see, try and get help with the unfamiliar Apple music player — and later, the iPhone — in stores that the company controlled. (Awkward flashback: BusinessWeek magazine, now Bloomberg Businessweek, published a 2001 column with this headline: “Sorry, Steve. Here’s Why Apple Stores Won’t Work.”)
More recently under Angela Ahrendts, the retail store boss who is leaving her post after about five years, Apple opened fewer stores but created larger and more dramatic retail outposts. I don’t have an answer, but I wonder if the mission of the stores needs to change now that Apple is trying to be a different, less hardware-dependent company. Should Apple focus on more but smaller stores to maximize opportunities to interact in-person with more of its customers? Could the stores be even more aggressive about coaching people on the merits of Apple’s growing lineup of apps and services?
Apple may be more than happy to stick with its strategy on stores and with its corporate takeovers. But those of us on the outside can’t stop wondering what Apple could do differently to make its desired reformation real.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Shira Ovide is a Bloomberg Opinion columnist covering technology. She previously was a reporter for the Wall Street Journal.
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