Google has been busy making acquisitions this year, purchasing what seems like any company that isn’t nailed down. Nine acquisitions have already been announced since the beginning of February — five alone in April. Google has always been particularly acquisitive, and while there were only eight acquisitions in all of 2008 and 2009 combined, the company picked up 14 companies in 2007 and 10 in 2006. The majority of Google’s past purchases were mainly search- or Internet-related acquisitions, but recent purchases have hit other areas of the market as its strategy continues to broaden.
Yahoo CEO Carol Bartz was recently quoted as saying Google is too dependent on search, and needs to diversify or die — and that’s exactly what the company appears to be doing. The most recent announced purchase has sparked theories that Google may be venturing into the tablet computer arena; the company said it acquired BumpTop, a provider of 3-D multi-touch tablet interface software, for an estimated value of between $25 and $40 million. With the success of Apple’s iPad, companies have been dropping out of the tablet race before it’s even begun, such as HP, which ditched plans for a tablet computer earlier this month. But Google may have the strength to compete in this market, if its successful Android mobile operating system, which overtook the iPhone in mobile traffic in March, is any proof.
Google also recently purchased Agnilux, a stealth start-up that is said to be working on server or semiconductor technology, which could help put the tablet gears in motion. And, although it is only a rumor at this point, Google could be branching out even further as it is said to be looking at spending $1 billion on ITA Software, an airline IT and services provider.
Search and online video are still mainstays for the company, and many of its recent purchases fall into that category. One area Google might consider next is the do-it-yourself video advertising space. This could put the search giant in the middle to an increasing popular marketing strategy by aiding smaller and family businesses looking to create ads for videos on YouTube and other sites.
The recent acquisition spree has not taken the place of internal R&D either. According to a recent quarterly filing, Google’s R&D budget was up around 30% for the recent three- and six-month periods compared to same periods in 2009. In addition, Google Ventures, the company’s venture capital arm, has been stepping up investments for its year-old fund, which could become a force in the industry.
Google is still sitting on about $50 billion in cash reserves and based on recent disclosed and estimated deal valuations, has only spent about $275 million on acquisitions this year. CEO Eric Schmidt recently said that Google will continue to make one acquisition per month (or more considering their recent pace), “initiated by product managers who identify a need, find the best startup to fit it, and send the company through vetting and approval.” There really isn’t one area of the Internet that Google has not touched so far this year and with recent announcements that it is investing in wind energy and will also soon begin selling e-books through “Google Editions,” there seems to be no end to where the company could head next.
Google may be ahead of the game in one regard – the knowledge that the Internet and IT are quickly evolving into a hybrid of cloud, social and mobile technologies. With its strong foothold in the Internet market, broad acquisition strategy, flourishing mobile brand and potential tablet computer on the way, Google is in a good position for wherever the future of IT heads.
Google Acquisitions, 2010