Neil Cybart: Why Apple spent only $33 million on acquisitions in 2021

That's less than any other year in the Tim Cook era. (Median M&A spending: $1 billion.)

From a note to Above Avalon subscribers posted Wednesday:

My suspicion is that 2021 was a quiet M&A year for Apple given where the company finds itself from a product pipeline perspective. For the better part of the past five years, Apple’s mixed reality/AR plans have been the catalyst behind approximately 20% of Apple’s M&A deals. Apple’s foray into face wearables is now right around the corner - so close that the company likely has the main ingredients to get a V1 and V2 out the door without the need for additional M&A. Meanwhile, long-term R&D projects like Project Titan are still too far away to lead to a sudden M&A rush. Over the past five years, only three Apple acquisitions can be tied to its automotive ambitions.

We can’t underestimate another factor behind Apple’s quiet M&A year - Apple is doubling down on its long-held M&A philosophy. Apple does not use M&A to acquire revenue, users, or even products. Instead, Apple uses M&A as a tool to acquire talent and technology. There is a very simple thought process behind this philosophy. Apple feels that the product development processes already in place within the company lead to the best products capable of delivering premium experiences. Management is not interested in circumventing these proven processes by acquiring established products that have already gone through another company’s development process phase. Instead, Apple is looking to fill talent and technology holes that may become apparent during the product development process.

My take: I don't know nothin' about the timing of any face wearables, but Cybart's emphasis on Apple's home-grown development processes is right on target. I think of Apple, like Pixar, as a company with processes that only makes hits.

Click to enlarge the chart:

apple cybart acquisitions 2021

8 Comments

  1. Dan Scropos said:
    Apple acquired $85+ billion in Apple last year. Works for me.

    9
    November 17, 2021
  2. Kirk DeBernardi said:
    Maybe, as Jony Ive once said, they first think of products that will be desired, not of products that will sell.

    It’s desire that secures a product’s success.

    Procuring the best talent is proof of this.

    4
    November 17, 2021
  3. Phil Service said:
    The Beats acquisition seems like an exception. A mature product.

    2
    November 17, 2021
    • Bart Yee said:
      IIRC the Beats acquisition was primarily for their new streaming music service which I believe became Apple Music. They also acquired the services and abilities of Dr. Dre and Jimmy Iovine for Music and performers’ buy-in.

      So perhaps in M&A we should also include the hirings of additional talents – the former Mercedes and Porsche chassis engineers, the two Sony Entertainment execs, etc. as these are talent acquisitions.

      2
      November 17, 2021
  4. Fred Stein said:
    W.r.t. acquisitions, Apple has the best culture – no fiefdoms*. A big acquisitions brings in a large fiefdom, or several, which is tough. We shall see how the 2019 acquisition of Intel’s 5G IP and 2200 employees works out. I’m optimistic.

    *Horace Dediu haș discussed this miracle. There’s no other company approaching Apple’s size and revenue that is like this ‘one company’.

    3
    November 17, 2021
  5. David Emery said:
    Speaking of ‘culture’, it will be very interesting to see if Qualcomm can retain Nuvia talent.

    2
    November 17, 2021
    • Gregg Thurman said:
      Agreed, let’s see how Nuvia’s talent responds when Apple’s plans for 5G and data center reveals its self.

      1
      November 17, 2021

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