Ap­ple match­mak­ers may fi­nally be in biz

DNA (Daily News & Analysis) Mumbai Edition - - FRONT PAGE - —Bloomberg

Even in the ever-chang­ing tech­nol­ogy in­dus­try, there are some con­stants. One of those is match­mak­ers sug­gest­ing Ap­ple Inc buy Net­flix Inc. or (in­sert hot in­ter­net/me­dia com­pany of the mo­ment).

I have tended to dis­miss these ideas, in­clud­ing the Net­flix (and other) ac­qui­si­tion sug­ges­tions this week from a Jpmor­gan Chase & Co stock an­a­lyst. Ap­ple typ­i­cally builds ev­ery­thing on its own, although it oc­ca­sion­ally buys small com­pa­nies to plug in tech­nolo­gies it thinks are im­por­tant. Ap­ple bought Siri, for ex­am­ple, and struck deals with sev­eral com­puter chip and com­po­nent com­pa­nies.

Ap­ple’s largest pur­chase — Beats, for about $3 bil­lion — was the ex­cep­tion that proved the rule. The 2014 deal was the foun­da­tion for what be­came Ap­ple Mu­sic Ap­ple had re­sisted stream­ing mu­sic that peo­ple didn’t own, and it may have needed out­side ex­per­tise and tech­nol­ogy to nudge it­self in a dif­fer­ent di­rec­tion.

Now, Ap­ple is un­der­go­ing dras­tic cor­po­rate re­mod­elling, and its ap­proach to build ver­sus buy may need to change again.

Ap­ple wants to rely less on sell­ing de­vices and more on per­suad­ing its built-in au­di­ence to spend more on apps and sub­scrip­tions to dig­i­tal mu­sic, on­line video and news. Fu­ture Ap­ple dig­i­tal of­fer­ings must work well on mul­ti­ple com­put­ing de­vices, not just the ones that Ap­ple makes. That is not a skill Ap­ple has honed in-house.

The com­pany has been hir­ing Hollywood ex­perts for its ex­pected Net­flix-like web video ser­vice, but some ob­servers think they could use more help. Dan Ives of Wed­bush Se­cu­ri­ties sug­gested re­cently that Ap­ple buy Sony Corp’s US tele­vi­sion-and-film pro­duc­tion di­vi­sion or an­other en­ter­tain­ment ma­chine to push along its ef­forts.

Net­flix it­self may be out of reach, even for Ap­ple. But Net­flix has shown that a savvy com­pany doesn’t need to buy an en­ter­tain­ment com­pany to be­come an en­ter­tain­ment em­pire. Again, though, dif­fer­ent times for Ap­ple may call for dif­fer­ent and un­usual mea­sures.

I should say that it’s fun but also fool­ish to pre­dict the next big ac­qui­si­tion by Ap­ple or any other com­pany. Deal­mak­ing is un­pre­dictable. And dear reader, I’ve fallen vic­tim to this prob­lem. I wrote a piece two years ago say­ing big tech com­pa­nies weren’t go­ing to ride in and buy com­pa­nies in stag­nant in­dus­tries. Within months, Ama­zon agreed to buy a su­per­mar­ket chain for $14 bil­lion. I’m now out of the tech M&A pre­dic­tion game.

And while we’re talk­ing about re­think­ing Ap­ple’s ap­proach to merg­ers and ac­qui­si­tions, there’s also an op­por­tu­nity for Ap­ple to think dif­fer­ent with its re­tail stores. Ap­ple started to open its own shops in 2001, just be­fore the de­but of the ipod that be­came Ap­ple’s first truly large-vol­ume prod­uct.

It was help­ful for peo­ple to see, try and get help with the un­fa­mil­iar Ap­ple mu­sic player — and later, the iphone — in stores that the com­pany con­trolled. (Awk­ward flash­back: Busi­ness­week mag­a­zine, now Bloomberg Busi­ness­week, pub­lished a 2001 col­umn with this head­line: “Sorry, Steve. Here’s Why Ap­ple Stores Won’t Work.”)

More re­cently un­der An­gela Ahrendts, the re­tail store boss who is leav­ing her post af­ter about five years, Ap­ple opened fewer stores but cre­ated larger and more dra­matic re­tail out­posts. I don’t have an an­swer, but I won­der if the mis­sion of the stores needs to change now that Ap­ple is try­ing to be a dif­fer­ent, less hard­ware-de­pen­dent com­pany. Should Ap­ple fo­cus on more but smaller stores to max­imise op­por­tu­ni­ties to in­ter­act in­per­son with more of its cus­tomers? Could the stores be even more ag­gres­sive about coach­ing peo­ple on the mer­its of Ap­ple’s grow­ing lineup of apps and ser­vices?

Fu­ture Ap­ple dig­i­tal of­fer­ings must work well on mul­ti­ple com­put­ing de­vices, not just the ones that Ap­ple makes. That is not a skill Ap­ple has honed in-house

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