
Apple should buy big companies, says Scully - groundCode
http://www.bbc.co.uk/news/technology-24489156
======
adventured
It's amazing how quickly Sculley reminded me why he had no business running
Apple.

"He said it could shift the 'whole landscape of e-commerce' if it bought, for
example, eBay."

Why not just buy Amazon? Or the moon? It's really big too.

"... when you look at the Passbook, and fingerprint recognition - what would
it mean if Apple went out and bought eBay? And they had PayPal, and integrated
that? My guess is you'd suddenly see the whole landscape of e-commerce shift."

It'd shift alright. The efforts toward fingerprint theft and black market
print trading would skyrocket, because there would suddenly be a direct
financial link to millions of fingerprints. You can change your Visa card, you
can change your address, you can change your phone #, you can change your
social security #, you can change your name, you can change your password, you
can change your PIN #, you can't change your finger prints.

~~~
padobson
+1 for buying the moon strategy.

I hope my next iPod comes bundled with green cheese.

------
casca
Given Sculley's time and "success" at Apple, the data suggests that doing
exactly the opposite of what he proposes would be in Apple's best interests.

~~~
Keyframe
Define success. I watched Triumph of the Nerds last night that somebody linked
to here at hn. Sculley led Apple to 10x sales increase and left the company
with $2 billion in cash and $200 million of debt. Sounds like a success to me,
considering Macintosh was not a sales success people think it was (from the
horses mouth from the documentary).

Gil Amelio on the other hand... but at least he brought (bought) Jobs back
into Apple, who ousted him soon afterwards.

------
mathattack
_" Here's a man who has spent 33 years at Microsoft, loves the company," he
said. "He really did not get enough credit for what he did accomplish.

"I can't name a CEO who didn't make some mistakes in the hi-tech industry.

"I think Ballmer has a lot he ought to be proud of. So he didn't get
everything right - not many people do."_

Ummm.... Is he suggesting lets celebrate someone who spent a lot of money
buying companies that didn't pan out? And better yet, let's suggest the
company that destroyed them in the market to switch and follow their
vanquished foe's failed strategy?

No wonder he destroyed so much value at Apple!

------
casca
This touches on the issue of why companies have amassed such huge reserves and
seem unwilling or unable to spend them. Clayton Christensen (of Innovators
Dilemma fame) gave an interesting talk at the RSA last month[1] where he
described a possible reason for this. Unfortunately only the audio is up but
they do often have video so perhaps that'll be there soon as the slides were
very important.

The high-level summary is that in order for companies to develop market-
creating changes, they need to be willing to make long-term investments with
high probabilities of failure. This hasn't happened because the incentives of
the management of the company are to provide short-term results which means
they choose to only deliver incremental improvements or cost-savings as it has
a greater improvement in the short-term on share prices and their
remuneration.

He went into far more detail - listen if this sounds interesting to you.

[1] [http://www.thersa.org/events/audio-and-past-
events/2013/the-...](http://www.thersa.org/events/audio-and-past-
events/2013/the-capitalists-dilemma)

~~~
cylinder
They aren't in a capital intensive business. Does this mean they have to throw
away their money on frivolous investments?

Having a ton of cash does not change the economics of any single investment.
Every investment decision is based on the individual parameters and expected
outcomes and circumstances surrounding it. You don't think, "Hey, this is a
shitty investment, but we have a ton of cash, so if this one sucks, who
cares!"

So let's say Apple sees value in acquiring eBay (ridiculous, but it's the
hypothetical put forward by OP). They take a look at eBay. Nothing about the
acquisition changes because Apple happens to have a lot of cash, except for
maybe the cost of the purchase, which in current interest rate environments is
almost negligible (they can borrow extremely cheaply as evidenced by their
latest massive bond sale).

Say Apple wants to build a revolutionary new TV. That is not a huge capital
investment. They just keep paying their engineers and designers, perhaps hire
a few more. The cost of this labor is not even worth mentioning. The
manufacturing is contracted, they don't have to buy a bunch of machinery. In
fact, they can announce the product and get a million pre-orders before
shipping and pay for the whole thing in an instant.

------
roc
Has any big acquisition ever made for a positive integration?

And if Apple wanted to dip into payments, a mobile payment processor is far
more compatible with their existing offerings and more Apple-y to boot.

Square would be the obvious choice, not Paypal.

~~~
Touche
> Has any big acquisition ever made for a positive integration?

Exxon/Mobil, AT&T/BellSouth come to mind.

~~~
roc
I was thinking more about 'acquisitions of a fundamentally different
business'.

Mergers of very similar businesses are a little different.

------
outside1234
Apple culture is too unique - 80 hour weeks, getting yelled at constantly,
crazy secrecy - its hard to match that with other big companies.

------
FedRegister
Yes, let's listen to the man who almost drove Apple to bankruptcy because he
thought computers and soda were sold the same way.

~~~
DigitalJack
He left Apple with $2Billion cash in the bank, and only about $200Million in
debt. Hardly bankrupt.

([http://en.wikipedia.org/wiki/John_Sculley#1983.E2.80.9393:_A...](http://en.wikipedia.org/wiki/John_Sculley#1983.E2.80.9393:_Apple_Inc.))

------
chris_wot
The worst thing a big company can do is buy another big company. The two will
never mesh well - one will be subsumed into the other. It is very, very rare
that big acquisitions and mergers work out well. One company is sure to wither
on the vine.

If you don't believe me, go ask someone who worked at an EMC company who was
part of an acquisition.

------
Tyrannosaurs
eBay is an obvious nonsense, there's no link up there that makes sense.

The only largish company that springs to mind that might makes sense is one
Apple tried to buy previously and failed - Dropbox. Apple have a weakness in
their cloud service offerings that Dropbox might help fill but given what it
would likely cost ($5bn+) and how Apple have slowly been improving in this
area, I suspect that Apple would be as well just sinking that money into what
they're already doing.

~~~
k-mcgrady
I agree Apple has been improving in cloud services but did they not completely
scrap their Dropbox alternative? (iDisk).

~~~
Tyrannosaurs
iDisk died with mobile me.

Interestingly as an iOS user I don't find Dropbox a great fit because of the
jarring of the file system model with the sandbox model. I'm sure that their
cloud expertise would be beneficial to Apple but it may be that the optimum
time for the two organisations to come together has passed.

------
OafTobark
Instead of buying a company like eBay, Apple should try to acquire a company
like Tesla, assuming Elon is ever willing to sell (probably not).

1\. Apple has considered building a car before

2\. Not quite the same but essentially an EV is pretty much a giant computer,
and more relevant to Apple's current strength than entering the e-commerce
space itself. There is a lot of baggage that comes with the eBay/PayPal
business model (I realize this is just an example Scully used) that Apple
probably doesn't want even if they were to enter the payment space.

3\. The market for EVs is still tremendously young and in my opinion hugely
massive and one worth entering and competing in right now even if it is far
from Apple's current product lineup and doesn't sync as well as all of its
existing product.

4\. Even with point #3 above, Apple is working with car manufacturers already
to integrate Siri and other things probably. This might put a dent in
partnerships (maybe) but arguably the EV market is more important than
extending a marketing strategy to integrate Siri and other aspects into other
major car brands in my opinion.

Just my two cents.

------
digitalengineer
Apple should buy TomTom and get their maps sorted out.

~~~
xemoka
I think it would be more advantageous for them to heavily invest in promoting
Open Street Maps (OSM) contributions and editing. Make it easy, integrate into
OSM (although MapBox is doing a fantastic job with the iD editor). Get that up
to snuff and then start using solely OSM data... but that's a blue sky and
Apple isn't exactly renowned for its use of OpenSource data / software.

~~~
megrimlock
That's a clever idea. Apple absolutely makes use of Open Source, but only when
it makes strategic sense, not out of idealism. (Examples: BSD->OSX,
khtml->WebKit, LLVM.) In this case Apple needs a way to massively upgrade the
quality of their data-set (they _still_ have fundamental errors right in San
Francisco! presumably Cupertino near 1 Infinite Loop is sorted by now). They
do not want to be in the business of cultivating a gigantic geographic
database, so aligning themselves with the many others out there who would like
access too a Google Maps quality db is quite clever. They would have to think
carefully about how to present this, to make it clear the data is not theirs,
in case there are any horrendous gaffes in it.

------
vinceguidry
Building great products is hard. Take something hard and try to scale it, you
get shit. You have to make it easy first, reduce it to a formula that you can
then abstract and export to other domains. Apple has not achieved that. They
can't buy up big companies and expect them to suddenly start getting the same
results Apple gets. This is pie-in-the-sky nonsense.

------
pinaceae
only works if you immediately fire all top and middle line manages in the
aquired company, lest you import a hostile culture and a lot of foreign
politics.

HP buying EDS, Atos buying SBS - if you ever talk to employees on the inside
you'll hear about what a big aquisition means.

Big Pharma is better in this, buying others is a key market tactic. Pfizer's
handling of the Pharmacia merger is a great example of how to do it - go in
hard, literally destroy everything in the target.

~~~
cpeterso
Besides EDS, HP's acquisitions of Palm and Autonomy didn't turn out so well
either.

------
arbuge
Maybe Apple should indeed make some acquisitions with its cash hoard - but it
seems to me that the kinds of prospects that would fit best with its vision
are companies focused on engineering great hardware-centric products which
consumers love. eBay and PayPal don't match that vision.

------
dan1234
I always thought Yahoo would have been a good acquisition for Apple, back when
Yahoo were courting Microsoft and Apple was getting its feet wet with iAds.

Buying eBay/Paypal would be interesting but the same could be said for Google
buying them.

~~~
seanmcdirmid
As a Microsoft employee, I personally would have loved for Apple to catch the
bullet we dodged :). I hope yahoo finds it way, but a big company buying them
will help no one.

------
beedogs
_" I think Ballmer has a lot he ought to be proud of. So he didn't get
everything right - not many people do."_

The mind boggles. He's probably a nice guy, but there's a reason he doesn't
work for Apple anymore.

------
walshemj
90% of these uber mergers dont really add value and end up destroying
companies _snif_ DEC being a premier example - of course merchant bankers and
lawyers get a metric shit ton of cash for advice

------
vgoel
I am surprised that anyone would even solicit the opinion of this bozo.

------
protomyth
I cannot imagine any use Apple would have for eBay / PayPal. They seem like
they would be more effort than they are worth. I could see Adobe and AMD.

~~~
joeldidit
I agree. What a mistake they would be making to buy eBay. eBay's anti-
innovation and stagnation-driven culture would kill everything dead.

------
xutopia
What did Ballmer do right though? I'm serious.

~~~
twoodfin
Kept Microsoft's enterprise licensing rolling along to continued substantial
profits, both by tending to existing "franchises" (Windows, Exchange, SQL
Server) and launching new ones (SharePoint is now something like a $2B
business).

Ballmer is a sales guy at heart, and I always suspected that his staying power
at the company had much to do with his relationships with Microsoft's largest
business customers. That someone like the current Ford CEO is considered a
candidate to replace him only reinforces that impression.

~~~
walshemj
Alans an engineer from what I recall?

~~~
twoodfin
Sure. My point wasn't that they're considering bringing in another sales guy,
but rather they're looking for someone who understands the large enterprise
market. Microsoft and its shareholders fear nothing more than waking up to
headlines about 100,000+ seat companies, like Ford, launching initiatives to
get off of Exchange and onto Gmail.

------
waltercfilho
Absolutely not.

------
bsullivan01
[http://finance.yahoo.com/q?s=EBAY](http://finance.yahoo.com/q?s=EBAY) $70
Billion market cap so they might need to offer around $90 Billion to be taken
seriously. That's a nice chunk.

Maybe they should buy an enterprise company and get serious money from
businesses too.

------
cremnob
Buying back stock is the best use of cash right now.

~~~
walshemj
id prefer a dividend give the spare cash directly to the owners.

