This week, the tech web is buzzing with news that Apple will soon close on a deal to purchase Beats by Dre for $3 Billion.
This is but the latest in a string of mega deals that have only gotten bigger and bigger with each announcement. There is some truth to what tech insiders have hypothesized about with the Beats acquisition: that the value is in the Beats by Dre streaming service moreso than in the company’s collection of large colorful headphones for hip hop music lovers.
Recall in 2011, Microsoft bought Skype for $8.5 billion even though Skype wasn’t making any money really but it wanted to get in on the success of Google Voice and iPhone’s Facetime.
And Facebook‘s purchase of Instagram for $1 billion was really to get access to Instagram’s impressive accumulation of 10 million new users in just a year. Similarly, its $19 billion recent purchase of WhatsApp is also because its own attempt to get into the instant messaging biz didn’t take off. Ergo, if you can’t beat em. Buy em!
Even historically, there has always been a bigger picture in acquisitions. In the 1990s, Apple bought NeXT for $429 million to get Steve Jobs back, after it realized its big mistake in squeezing him out in the first place.
But it doesn’t always work without a vision.
In 2005, FOX News mogul Rupert Murdoch purchased MySpace for $580 million to get in on the online media business but ended up selling it off years later for $35 million – merely 6% of its acquisition price, getting beat out by some college kids who realized the future was in social media – not just any media.
There are lessons to be learned from the top acquisitions of the biggest tech companies which FinancesOnline.com breaks down in the following infographic: