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March 27, 2009
Tech companies love their mergers, and win or lose they can’t stop undertaking them. In recent years we’ve seen a few marriages that aren’t quite working (eBay and Skype), and a few dysfunctional combos that worked themselves out in the end (HP and Compaq). And we may be in for a lot more. Recessions—like the one we’re now wallowing in—are often a big time for mergers for one simple reason: Businesses are cheap. Companies with the cash and the chutzpah tend to take advantage of that, and when we come out the other side, the industry landscape looks a little different.
Here are four tech mergers I’d like to see (or at least, I’d like to see proposed). Some make perfect sense. Some are admittedly way out there. All would certainly make headlines.
Dell was once a titan known for pushing the tech envelope, often the first to implement new technologies and usually at a cheaper price than everyone else. Now Dell—despite a few attempts to pick itself up again—is largely regarded as a lifeless corporate box-maker, where innovation is a four-letter word. Why not kick-start things by acquiring now-hot tech company ASUS, which isn’t just the hip maker of the Eee PC netbook but also manufacturer of a whole range of OEM tech, including motherboards? One snag: ASUS has a complicated structure with tons of business partners, and would face a regulatory nightmare in getting this done. It might actually be easier for ASUS to acquire Dell.
Sitting on $25 billion in liquidity and a rapidly stagnating stock price, it’s time for Apple to make its move from niche hardware seller and media retailer to something with more ambition. One idea: Buy Time Warner Inc. (market value: a mere $36 billion) and seize control of a huge chunk of the entertainment market, an area where Apple has been dabbling for years. If Steve Jobs is serious about killing DRM, this is a surefire way to do it: by owning a giant media company and a massive archive of movies, cartoons, and TV shows that could be sold on iTunes ... keeping all the revenue itself. Imagine: Apple would also own Time magazine, so Jobs could put himself on the cover every week, just like Oprah. On the other hand, Apple would also be stuck with AOL.
Scared to death of falling Web ad revenue and a monstrous workforce that demands a steady paycheck, Google would do well to start hunting—hard—for alternative revenue streams as a hedge. It’s already made a solid start with Android, so why not go whole-hog into wireless? No, don’t build a network from scratch, buy a small—but national—one that’s already up and running ... and that already happens to support your product.
Sony has a big problem: It makes well-regarded products, but it does a terrible job of putting them in places where people can try them out (the three dozen or so SonyStyle stores notwithstanding). Why not buy its own retailer and make it a showcase for Sony gear? (Just put the other guys’ stuff in the back.) And go big, too. With a market cap of just $11 billion, Best Buy could be bought practically out of Sony’s petty cash.
Christopher Null is a veteran technology journalist. He writes about tech daily at tech.yahoo.com/blogs/null.
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