Apple may have had a lackluster quarter, but the company still has plenty of cash in its coffers, and may be willing to spend big to enter new market segments. Which makes you wonder: Which companies could Apple have its eyes set on, and what would make the most sense as an acquisition target?
Apple CEO Tim Cook said during the company’s earnings call Tuesday that it would “continue to look” for acquisition targets, including big companies. “We would definitely buy something larger than we have bought thus far,” he said, which essentially means that Apple is prepared to spend more than the record $3.2 billion it shelled out for Beats in 2014.
Cook also explained which companies Apple is interested in, stating that the goal would be to complement existing initiatives, or “accelerate entry into a category that we are excited about.” The latter seems to make a lot of sense as the company is looking for the next big thing. But who could, or should, Apple buy?
Here are three suggestions:
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It’s an open secret that Apple is very interested in the automotive space. Still, building its own car from scratch could take many more years, and come with numerous challenges that the company never dealt with before. So why not team up with someone who is already reinventing the car in a very Apple-like fashion?
Tesla has not only managed to get people excited about electric vehicles — the recent launch of the Model 3 even led to iPhone-like lines in front of its stores. It’s also uniquely positioned to actually take the electric car mainstream, much in the same way Apple popularized smartphones close to a decade ago, thanks to its own battery factory and lots of high-tech R&D.
However, even Tesla has its limits. The company’s CEO Elon Musk seemed genuinely surprised by the overwhelming interest in the Model S — more than 400,000 consumers have committed to buying the car when it’s being released next year. A little bit of cash from Apple could get a long way towards making sure that the Model S doesn’t become a victim of its own success.
Internet-connected loudspeakers have long been a missing link in Apple’s device ecosystem. So why not buy the company that has been building them in a very Apple-like fashion for over a decade? Sonos has created its own ecosystem and long emphasized style over specs, much like Apple does with its own products.
At the same time, Sonos has struggled to keep up with increased competition. There is Amazon, whose smart Echo loudspeaker has become an overnight sensation with consumers. And there is Google with its $35 Chromecast Audio dongle, as well as a platform that’s poised to make internet-connected speakers from a number of different manufacturers interoperable.
Sonos was forced to lay off staff this month, and is now looking to catch up with its competition by adding voice control and home automation features. At the same time, Sonos wants to attract more consumers with its own stores — a move straight out of Apple’s playbook. Add to this the fact that Apple still doesn’t have an answer to the Echo (or Chromecast Audio, for that matter), and you see why this could be a match made in heaven.
Chances are you’ve never heard of Netatmo, as it is just one of many companies trying to get consumers excited about the connected home. What’s more, it’s first product, a connected weather station, had niche written all over it.
But Netatmo has since also released a smart home security camera that comes with an interesting twist: Netatmo’s welcome camera packs facial recognition technology, which isn’t just smart to detect unwanted burglars. Instead, the camera can also be a key component of the connected home. Possible scenarios could include playing different music on your internet-connected speaker based on who enters the room, or even personalizing content recommendations on your TV.
Apple unveiled its own smart home technology, dubbed Homekit, two years ago, but has made little headwinds towards mass consumer adoption. That’s largely because the connected home itself is still at its infancy, with few consumers ready to invest into expensive products that may stop working any day.
Buying Netatmo doesn’t necessarily add a lot of technology to the Homekit platform, but the company’s camera could become that one cool product for Apple to get people excited, and make sure it doesn’t leave this market to others. Plus, Netatmo already follows similar privacy guidelines as many Apple products: The company doesn’t upload its videos and identification data to the cloud, and instead keeps them locally and out of the reach of others.
So which company will it be?
Possibly none of them. Tesla, Sonos and Netatmo all make sense as acquisition targets for Apple, but the company may decide to build similar technology in-house instead. Buying Tesla in particular would also be a massive financial undertaking. Tesla’s market cap is currently close to $32 billion, and Apple would likely have to pay a significant premium to make the deal work.
Still, Apple has for some time been looking for the next big thing, and the Beats acquisition has in a way laid the groundwork for further big bets: Apple’s $3.2 billion bet on Beats didn’t just buy the company a headphone business, it also laid the ground for Apple Music, which now has 13 million paying subscribers. In fact, Apple Music was key to Apple making more money with its services than with sales of its Mac computers during its most recent quarter — a first for a company that many still primarily view as a computer maker.
Buying a speaker, a camera or even a car could have a similar transformative effect on Apple’s business — and passing on such big and bold opportunities may backfire in the long run.