Monday, April 25, 2011

Tech Buys and Goodbyes

Unlike basketball games that have time-out’s, technology runs after its own life in coping up with one trend to another. Consumers need to satisfy our tech-savvy hunger, which is why we always look for organizations that drive ingenuity and innovation as fast as possible.

This is exactly why technology companies strive to be the best and the first in launching latest gadgets, so that they will be able to set the tone in the market. However, no matter how constant the research and developments may be, some companies just cannot keep up with their competitors. As a result, they buy or sell another company to leverage on strengths, maximize opportunities and lessen threats against a rival company.

Acquiring to Lessen Threats
Hewlett-Packard is one of the largest information technology companies in the world today. But it wouldn't be successful as it is if it only relied on its basic computers and printers, which it is very known of.

As of date, it has acquired more than 100 companies since 1981, ranging from less than $10M to more than $100M. Among the biggest and most popular acquisitions are Compaq (personal computers), 3Com (computer networking), 3PAR (data storage), and Palm Inc. (smartphones). These acquisitions have placed HP in better ranking and higher revenues, as compared to when it was operating just in itself.

In the same manner, our most-abused and used Google has acquired around 90 companies since 2001. By looking at their list of buys, it seems like Google wants to be a one-stop shop for everything we online junkies need. Their acquisitions have not only diversified their portfolio, but also led to more innovative products and services, upping their revenues to an improved level.

Some other companies who found themselves better with the buying of another company are CBS and Wired. CBS bought CNet for $1.75B a few years back in order to put themselves in a great position not only on television media, but also in computer and print media. Similarly, Wired bought Ars Technica for $25M, with the aim to bring readers to a newer, higher level of expertise.

Closing to Focus on Strengths
Do you remember back in 2005 when Google Video and Youtube were going at it? Since Youtube essentially won, Google eventually bought it in 2006 to end the competition. Although that was the case, Google kept the Video – until this April 2011, when they finally announced the closure of the service. It’s not a surprise at all. Besides, why keep two similar services, when the other one is just a vestigial tail for Google?

On the other hand, Cisco also gave a stunning announcement that their Flip Video line of digital cameras is saying farewell even if it became a success. Why? Because they have realized that the company is still a network infrastructure business after all, so efforts on sales, marketing, research and development should be focused on maintaining their core product on top of the line.

As they say, “if you can’t beat them, buy them.” But buying isn’t just all that. Acquiring a company means that one company acknowledges the other company’s core competency. It also means that they want to work it out together to complement the existing core competencies in order to produce an improved, quality-oriented, and most complete product or service.

This article is my thirteenth contribution to Manila Bulletin -- one of Philippines' leading broadsheets -- published on April 25, 2011 (Monday) in the TechNews Section. You can view the PDF version here.


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