9 tech acquisitions that made no sense at the time (some of which still don't)
As Oracle enters the fray to take control of TikTok’s US business, CRN looks back on some bewildering acquisitions that did not appear to be natural bedfellows at the time, but some have proven to be canny investments, while others are still too recent to judge and others were unmitigated disasters.
This year began with the tech industry puzzled by Xerox's proposed takeover of its larger rival HP. If 2020 has proven anything, it's that things can always get stranger. Though the pandemic put paid to Xerox's efforts to acquire its competitor, this year may still surprise, with the possibility of either Microsoft or Oracle taking over the US operations of video social media app TikTok.
As part of US president Donald Trump's ongoing feud with China, he has ordered the firm to divest its US operations - valued at over $20bn - within 90 days or face being banned over national security fears.
The interest of the two tech firms has puzzled many, Microsoft at least has some history with social media, having purchased LinkedIn four years ago, but it's hard to see the natural correlation between database vendor Oracle and the video app beloved by teens worldwide.
As the clock counts down on who will the TikTok contract, we look at nine tech acquisitions that bewildered the tech industry at the time. In some cases, time has proven these to be incredibly smart investments, the jury is still out on the success of others and some of these purchases were doomed from the day they were announced.
Microsoft buys Nokia
How much: $7.2bn
When: 2014
Why: Despite then-CEO Steve Ballmer laughing at the introduction of the iPhone because "it doesn't appeal to business customers", he quickly changed his tune and wanted in on the smartphone market.
Under his watch, Microsoft shelled out $7.2bn for Nokia's mobile arm. Nokia had long sat at the top of the mobile phone market with its iconic phones, but the advent of the iPhone and other smartphones saw its lunch being eaten.
Ballmer left Microsoft before the deal completed, leaving Satya Nadella (pictured left with former Nokia boss Steven Elop) to rejuvenate a project he had admitted he didn't believe in. The Nokia deal saw Microsoft axe 19,000 jobs (though it generously offered free Windows Lumia phones to those who would take redundancy) and just one year later it cut its losses and wrote off $7.6bn related to the acquisition. It stopped support for the Windows Phone operating system in December 2019.
Heads scratched: 3/5. Nokia was struggling to maintain relevance at the time against the likes of Apple and Samsung, and Microsoft was continually playing catch-up to those titans of the market.
Which successful video chat software was originally an albatross around its first buyer's neck? Click the next page to find out...
9 tech acquisitions that made no sense at the time (some of which still don't)
As Oracle enters the fray to take control of TikTok’s US business, CRN looks back on some bewildering acquisitions that did not appear to be natural bedfellows at the time, but some have proven to be canny investments, while others are still too recent to judge and others were unmitigated disasters.
eBay buys Skype
How much: $3.1bn
When: 2005
Why: Online auction site eBay was in its prime in the early to mid-2000s, allowing people all over the world to buy and sell new and second-hand items to each other. It was a simple formula that worked well.
Many were perplexed when the auction site bought the then-nascent video chat company for $2.6bn, apparently to facilitate easier communications between buyers and sellers. It seems, though, that eBay's users were happy enough with communicating through email and the site failed to properly integrate Skype into its offering.
It sold a majority stake of the company to a private investment firm in 2009 for $1bn less than it paid. Microsoft eventually bought Skype for $8.5bn in 2011, integrating it into its own settings and successfully establishing Skype for Business.
Heads scratched: 3/5. A classic example of overcomplicating a simple and successful business model.
Click the next page to find out what new territory Microsoft found itself in with this mammoth purchase in 2016...
9 tech acquisitions that made no sense at the time (some of which still don't)
As Oracle enters the fray to take control of TikTok’s US business, CRN looks back on some bewildering acquisitions that did not appear to be natural bedfellows at the time, but some have proven to be canny investments, while others are still too recent to judge and others were unmitigated disasters.
Microsoft buys LinkedIn
How much: $26.2bn
When: 2016
Why: Microsoft bought the professional networking site ostensibly to "grow and integrate it with Microsoft's enterprise software, such as Office 365".
The tech giant had previously tried to get into the social tools space with the purchase of Yammer for $1.2bn in 2012, but it failed to capitalise on that purchase. So its whole-hog approach to acquiring LinkedIn caused heads to turn.
Although it was again essentially playing catchup with competitors, this time in the social media space, LinkedIn has been a successful addition to Microsoft's portfolio. It has continued to be run independently and is quietly thriving, seeing user numbers jump nearly 50 per cent from 433 million at the time of acquisition to 645 million in 2019. Its generated revenues of $6.9bn in Microsoft's most recent fiscal year. (L-R: LinkedIn CEO Jeff Weiner, Microsoft CEO Satya Nadella, LinkedIn founder Reid Hoffman)
Heads scratched: 3/5. After the underwhelming utilisation of Yammer it was surprising that Microsoft decided to delve further into the social media space. However, time has proven it to be a good investment for the tech giant.
Click the next page to find out the HP acquisition that continues to haunt it a decade later...
9 tech acquisitions that made no sense at the time (some of which still don't)
As Oracle enters the fray to take control of TikTok’s US business, CRN looks back on some bewildering acquisitions that did not appear to be natural bedfellows at the time, but some have proven to be canny investments, while others are still too recent to judge and others were unmitigated disasters.
HP buys Autonomy
How much: $11.1bn
When: 2011
Why: This is a doozy that we are still seeing the fallout from, nearly a decade later.
HP's former CEO Leo Apotheker had grand plans to transform the company from a PC and printer maker into firm focusing on enterprise software, in a bid to keep up with rival IBM, who had already undergone such a transition.
It purchased UK-based Autonomy for $11.1bn in 2011, with the intention of it to be run as a separate business unit under its founder and CEO Mike Lynch.
That shareholders were reluctant to agree to the deal was the first warning sign that this deal would come a cropper.
Just over a year later, HP took an $8.8bn writedown on the UK company. It accused Lynch and his CFO Sushovan Hussain of cooking the books prior to the acquisition and has sued them for $5bn in the High Court, accusing them of "accounting improprieties and misrepresentations". the trial concluded earlier this year, with the judgment pending.
Heads scratched: 4/5. This acquisition is a lesson in the benefits of sometimes just sticking to what you know.
Click through to find out what the brave new world Facebook entered with this ambitious purchase in 2014
9 tech acquisitions that made no sense at the time (some of which still don't)
As Oracle enters the fray to take control of TikTok’s US business, CRN looks back on some bewildering acquisitions that did not appear to be natural bedfellows at the time, but some have proven to be canny investments, while others are still too recent to judge and others were unmitigated disasters.
Facebook buys Oculus Rift
How much: $2bn
When: 2014
Why: Oculus Rift was a virtual reality (VR) gaming start-up founded in 2012 and many were perplexed when Facebook - whose gaming acumen up until that point was freemium offerings such as Farmville - splashed $2bn on it in 2014, representing the social media giant's first foray into hardware.
Fast forward six years, and VR is still a niche, but growing, area of gaming. Oculus has become overshadowed by competitors such as Sony's Playstation VR. Despite a partnership with Samsung, the Oculus headsets still don't appear to be capturing the public's imagination.
However, one side effect of Facebook's unexpected acquisition is that it initiated a tech race and spurred the likes of Microsoft and HTC to develop their own VR headsets.
Though reaction to Oculus by gamers has been lacklustre, Facebook continues to twiddle with it and may yet see the fruits of its labours as VR gaming continues to become more popular.
Heads scratched: 4/5. At a time when gaming on Facebook was made up of Farmville and its clones, a social media site buying VR tech and entering the hardware market did not seem to make sense. The jury is still out on whether it was a smart move by Zuckerberg.
What plans does Apple have for this surprising buy from last year? The mystery deepens on the next page
9 tech acquisitions that made no sense at the time (some of which still don't)
As Oracle enters the fray to take control of TikTok’s US business, CRN looks back on some bewildering acquisitions that did not appear to be natural bedfellows at the time, but some have proven to be canny investments, while others are still too recent to judge and others were unmitigated disasters.
Apple buys Drive.ai
How much: Unknown
When: 2019
Why: This is a story with a lot of twists and turns. Self-driving car startup Drive.ai was founded in 2015 and was once valued at $200m. But by June 2019, it was on the verge of collapse and planning to shut up shop just as Apple swooped in and bought it.
This is interesting as Apple appeared to be winding down its own efforts in the autonomous car space, axing 200 employees from its beleaguered Project Titan initiative in early 2019. Apple seems to have put the brakes on shuttering the project with its acquisition of Drive.ai.
Heads scratched: 4/5. Autonomous automobiles don't sound like natural bedfellows to Apple's other offerings, but time will tell if this was a canny investment for the tech giant.
What happens when a semiconductor firm buys an enterprise software firm it had no previous relationship with? Click through to find out
9 tech acquisitions that made no sense at the time (some of which still don't)
As Oracle enters the fray to take control of TikTok’s US business, CRN looks back on some bewildering acquisitions that did not appear to be natural bedfellows at the time, but some have proven to be canny investments, while others are still too recent to judge and others were unmitigated disasters.
Broadcom buys CA Technologies
How much: $18.9bn
When: 2018
Why: Semiconductor vendor Broadcom had its plans to buy rival Qualcomm scuppered by the Trump administration over national security concerns.
It then baffled many in the industry with its decision to purchase enterprise software firm CA Technologies instead, considering the pair shared nothing in common.
Broadcom CEO Hock Tan explained the logic behind the acquisition at the time as representing an "important building block as we create one of the world's leading infrastructure technology companies.
"We intend to continue to strengthen these franchises to meet the growing demand for infrastructure software solutions."
Broadcom then surprised the industry again when it snapped up Symantec's enterprise division for $10.7bn last year. The addition of Symantec to Broadcom's portfolio indicates that it is serious about the development of its infrastructure software.
According to CEO Tan in a recent Q2 earnings call, CA Technologies integration is working out better than he had anticipated.
"The financial performance of CA has exceeded even our regional plan when we did the deal 18 months ago," he told analysts on the earnings call.
"It's evident in the sense that we are able to expand and grow our bookings by focusing on the largest enterprises who buy a lot of this software."
Heads scratched: 5/5. Everyone was baffled by this one. It still seems a confusing choice but appears to be a successful bet, according to its chief exec.
Click on the next page to get the Intel on this chipmaker's unsuccessful attempt to integrate its most perplexing purchase
9 tech acquisitions that made no sense at the time (some of which still don't)
As Oracle enters the fray to take control of TikTok’s US business, CRN looks back on some bewildering acquisitions that did not appear to be natural bedfellows at the time, but some have proven to be canny investments, while others are still too recent to judge and others were unmitigated disasters.
Intel buys McAfee
How much: $7.6bn
When: 2011
Why: In 2010 speculation was rife that McAfee would soon be snapped up by a big player, with HP fingered as the most likely candidate. However, jaws collectively dropped when it was announced that chipmaker Intel had snapped the cybersecurity vendor up for a cool $7.6bn.
Renee James, then-SVP of Intel's Software and Services group explained the plan at the time to integrate security into its chips.
"The way to think about this is enhanced security solutions that can be hardened and new opportunities to deter threats that we can't do today alone in software," she stated.
"We think of it as an enhanced category of products that can only be created by unique hardware innovations in combination with the software product sets McAfee sells today."
After being scrutinised by EU anti-competition authorities, the deal was completed six months after it was announced.
Intel later re-branded McAfee as Intel Security in 2014, much to founder John McAfee's relief, who told the BBC: "I am now everlastingly grateful to Intel for freeing me from this terrible association with the worst software on the planet. These are not my words, but the words of millions of irate users."
But Intel's much-vaunted plans to incorporate security into the chipmaker's offerings failed to bear fruit. It sold 51 per cent of McAfee to private equity group TPG for $4.2bn in 2016, returning McAfee to its original brand name.
Heads scratched: 5/5 The move was a bolt out of the blue for the tech industry and was possibly a bit too much of a leap for Intel, whose main proposition remains as a chip manufacturer.
Amazon doesn't need shops - or does it? Click on the next page to discover its most surprising acquisition
9 tech acquisitions that made no sense at the time (some of which still don't)
As Oracle enters the fray to take control of TikTok’s US business, CRN looks back on some bewildering acquisitions that did not appear to be natural bedfellows at the time, but some have proven to be canny investments, while others are still too recent to judge and others were unmitigated disasters.
Amazon buys Whole Foods
How much: $13.7bn
When: 2017
Why: This is possibly the most bamboozling purchase in tech history. Amazon made its name as an etailer, and not needing a physical presence for people to buy their wares. It has been a very successful business model.
So when it was announced three years ago its intention to buy a chain of brick and mortar supermarkets, many were confused. Did this mean Amazon was admitting that a physical presence was needed in retail? Was it a show of support for a flagging retail sector?
Neither.
Whole Foods specialises in organic groceries and products. Amazon stated at the time the move was to make organic and healthy food more affordable for people. It was also going to integrate its supermarket operations with its Prime membership.
Having a physical presence throughout the globe also cuts on the costs of returns and deliveries for Amazon.
"Amazon bought Whole Foods not because it wanted to know how to operate stores. Amazon bought Whole Foods to learn about the grocery business so it could convert grocery consumers to online," wrote Richard Kestenbaum in Forbes, a year after the merger.
"It was never about the stores, it was about learning the business and understanding how customers behave in order to convert them to online grocery consumers."
Heads scratched: 5/5. No one saw the world's biggest etailer buying a bricks and mortar supermarket franchise, but the gambit seems to have paid off as Amazon continues to take no prisoners when it comes to retail.