Just Do Something

Monday, 24 February 2014

Eric Jackson, writing for Forbes in the wake of Facebook’s $16B acquisition of WhatsApp:

For the longest time, I’ve sat back nodding in quiet agreement with the Apple bulls who say: “We need to have faith in Tim Cook even though he’s been so reluctant to do any M&A because we don’t know what Apple is working on in its labs.”

No longer. Apple needs to start playing offense.

Apple needs to start picking off strategic assets as if their life depends on it, rather than continuing on with a plodding attitude that doesn’t match the speed of their competitive environment.

This is the worst sort of advice, suggesting a complete ignorance of everything Apple stands for. (Jay Yarow loves it, of course.) Just buy something. Spend, spend, spend. Acquire. Buy all the spaghetti, throw it against the wall, see what sticks. Wrong. Apple’s model is about focus. Apple wasn’t joking about “a thousand no’s for every yes” — that’s really how they think, what they believe. That’s the DNA.

Only one thing Jackson suggests makes any sense: Apple perhaps acquiring Tesla. I don’t think that’s likely, but I think it’s possible, for two reasons: First, Tesla could be integrated into Apple’s core business — selling high quality, well designed products that work well together. If you can imagine Apple making a car (and I can), then you can imagine Apple acquiring Tesla to jump-start the initiative. Second, Apple and Tesla share a fundamental engineering problem: batteries.

But other than Tesla, who else would it make sense for Apple to acquire for billions of dollars? No answers come to mind. Certainly not WhatsApp — as I wrote last week, Apple already has exactly the messaging platform it wants: iMessage, with hundreds of millions of users.

Conglomeration may well work out well for Facebook. General Electric has done well with that model for over 100 years. But it would be a disaster for Apple. Apple makes acquisitions for integration. Exhibit A: PA Semi — a chump change $278 million acquisition that laid the groundwork for Apple to become the leading mobile semiconductor company in the world.