TOP 6 MOBILE ACQUISITIONS
On June 29, 2007, Steve Jobs presented the iPhone to the world. The release of this advanced device completely changed the way we go mobile. Yes, smartphones existed before this time, but the era of “real” smartphones began on that day. This summer marks 7 years since the iPhone release and since then the word mobile has completely evolved. The majority of all human population uses their mobile phones throughout daily life, work, entertainment and everything in between.
What I really want to talk about is how mobile has transformed major tech companies, specifically companies with expertise in the mobile field being acquired by mobile tech giants. Unfortunately, some are not as successful as others. Let’s rock…
AdMob acquisition by Google
AdMob is a mobile advertising company founded by Omar Hamoui in 2006. Hamoui served as the founder and CEO of AdMob up until 2010, he stayed on board one year after the company was acquired by Google for $750 million in 2009. Why did Google purchase the company? Let’s briefly take a look at the history of Android as a mobile app development platform.
Android was founded in 2003 by Andy Rubin (who used to work at Apple as a manufacturing engineer) and a group of entrepreneurs. In 2005 Android was acquired by Google as the platform competing with Windows mobile operating system. In 2007 the iPhone emerged as a competitor with Google and Android OS quickly shifted its gears to compete with iOS.
The Android completely changed prior to the iPhone release and then after its release. By 2009 it had been a year since iOS got the App Store – that was when the mobile app world really took off. At this time Google needed its own mobile ads platform to stay afloat in the mobile arena and being able to serve ads on mobile devices. People went mobile and so Google did too.
How effective has AdMob been as of 2014? Well, the mobile ad solutions most commonly talked about are Facebook Mobile App Install Ads and Twitter Promoted Tweet for mobile ads, but you don’t really hear much about AdMob. Though this does not necessarily mean that the platform isn’t usable, it just is not at the top of the mobile ad solutions list.
Flurry acquisition by Yahoo
Let’s now preface the Flurry acquisition with one of the Steve Jobs interviews from 2010 at the D8 conference stage. Clearly it has been a bumpy road for the company since inception in 2005. Flurry now serves 150 billion mobile app sessions per month making it one of the top mobile analytic, monetization and advertising companies. Flurry is the most recent example of the acquisition trend. On July 21, 2014, Flurry was acquired by Yahoo for $200-300 million (the exact figures were not disclosed). Why did Yahoo decide to pull Flurry on board? Let’s look at how Yahoo’s CEO, Marissa Mayer, has been transforming the company. Simply based on how Marissa has changed the company, it is clear that she brought her knowledge and experience over from Google. She joined Google (as employee number 20) back in 1999 and quickly became the vice president of Google Local, Maps, and Location Services.
It was incredibly smart to shift Yahoo in the mobile direction, allowing it to better compete with Google. Though Yahoo has a long way to go if they want to catch up to Google in the mobile world. It will be interesting to see what Yahoo will do next.
Facebook acquisition of WhatsApp iOS app
This acquisition is particularly memorable merely due to the absolutely insane price Facebook paid WhatsApp founders Brian Acton and Jan Koum. Both founders are previous Yahoo employees. On February 14, 2014, Facebook paid a whopping $19 billion for WhatsApp – making it the largest acquisition to date. It has been more than 6 months since the deal and many analysts are still scratching their heads wondering whether WhatsApp was really worth that amount of money.
In December of 2013 WhatsApp claimed having 400 million active users use the service each month, that is roughly the number of users they had when the company was acquired by Facebook. For Facebook, who launched its own Messenger app in August of 2011, acquiring a serious competitor significantly increased its user base. But since WhatsApp was purchased, it continues to operate independently. WhatsApp was not shut down by Facebook or merged with Facebook’s Messenger app. Perhaps the hidden benefit for Facebook in this purchase was getting access to the WhatsApp user base. But that is just a speculation, the real reason remains unknown.
TestFlight acquisition by Apple
One of the most noteworthy Apple acquisitions in mobile space was Chomp. Chomp is a search engine app company that brought its expertise to the iTunes App Store. On February 21, 2014, Techcrunch fired a viral news article announcing that Apple had purchased Burstly and its two major services, TestFlight and SkyRocket. We covered this acquisition and highlighted Testflight as one of the more popular companies among app developers. We discussed how the majority of iOS apps are being developed with the help of TestFlight as their main testing platform.
After a bit of time, many were asking why Apple does not provide its own similar solution? Apple answered that question by acquiring TestFlight. As part of the iOS 8 official roll out this fall, iOS app developers will be able to use TestFlight as one of the tools that iTunesConnect provides.
NaturalMotion acquisition by Zynga
What is the first company that comes to mind when you think about iOS games? Many would say Zynga – let’s all admit we played FarmVille or Words with Friends at some point in our lives. For a long time the company’s huge success seemed like something that would be continuous – unfortunately, this was not the case. In Q2, 2012 the company made $329 million but in Q3, 2012 that number dropped to $317 million. Zynga Co-Founder Mark Pincus’s explanation for this drop caused many analysts to suspect that those glory days were gone.
In January, 2014, Zynga’s new CEO Don Mattrick announced that Zynga had purchased NaturalMotion for $527 million. For Zynga, it was the first step in acquiring highly popular iOS games and expanding its portfolio. At this time, launching a new game from scratch and being able to predict its success on the market does not exist. Zynga simply cannot afford to fail when it comes to launching new games. It is surprisingly cheaper for them to buy a successful competitor than to launch their own games.
MoPub acquisition by Twitter
Twitter’s familiar 140-character limit for sending a tweet was a prominent feature from day one. Twitter is severely involved in the mobile world and is now jumping on the mobile ads bandwagon. Last September Twitter purchased MoPub, a mobile advertising platform, for $300 million. It was certainly a bold step on Twitter’s behalf, competing with Facebook.
We recently covered MoPub and how the company has already helped strengthen Twitter’s mobile ads revenue. Since Twitter’s Promoted Tweet for mobile apps solution is fairly new, it is up in the air as to how effective it will be in the long run. While there are many case studies for Facebook Mobile App Installs Ads, there are almost none for Twitter’s new solution.
PS. Why 6 and not 5? Because people may ask “What was the number 6 you left out?” 🙂
Art Dogtiev, Head of Branded Content